finc 332 business finance
Spring 2012
Course Description
Principles underlying the financial management of a business: time value of money, securities valuation, capital budgeting, cost of capital, sources of funds, capital structure policy, cash management and dividend policy.
Pre-requisite: Financial Accounting
Course Learning Objectives
Upon completion of the course, students should be able to:
1) Apply fundamental financial techniques to solve common business problems
2) Evaluate financial opportunities using relevant theory and practice
3) Critique strategic issues from a financial perspective
Course Learning Activities
Textbook Readings:
Chapter readings are assigned according to the schedule which follows. Textbook reading is required and is designed both to reinforce what is discussed in class, and cover topics for which classroom time is insufficient.
End-of-Chapter Problems
For each textbook chapter reading, problems will be assigned. These problems will not be collected or graded, but selected problems will be discussed in class. These problems are the best preparation for the exams.
Assessment Tools
Exams= 90% of the final course grade
There will be three equally weighted exams, each worth 30% of the final course grade. Grades are awarded based on each student’s correct answers and the ability to clearly explain the calculation process.
Class Participation = 10% of the final course grade
This part of the student’s grade is based on the contribution to class discussions by way of asking and answering questions, and assisting in bringing about a productive learning environment. Attendance is also included in this part of the course grade.
Attendance Policy
Attendance is included in the Class Participation element of the course grade. However, students missing
more than seven classes, whether excused or unexcused, will fail the course.
Course Textbook
Besley, Scott and Eugene F. Brigham. 2008. Essentials of Managerial Finance, 14th ed. Mason, OH: Thomson South-Western
Course Schedule
1) An Overview of Managerial Finance
Finance manager’s responsibilities, business ethics, agency relationships
- Readings: Chapter 1 HW: none
2) Analysis of Financial Statements
Income statement, balance sheet, cash flow statement
- Readings: Ch. 2 HW: None
3) Analysis of Financial Statements
Ratio analysis
- Readings: Ch. 2 HW: 2,3,4,14
4) The Financial Markets and the Investment Banking Process
Financial markets and institutions
- Readings: Ch. 3 HW: 1,2
5) The Time Value of Money
Future value, present value
- Readings: Ch. 4 HW: 4,5,9,11,12,13,19,20,23
6) The Time Value of Money
Annuities, uneven cash flow streams
- Readings: Ch. 4 HW: continued
7) Special Topics
8) The Cost of Money
Interest rates
- Readings: Ch. 5 HW: 15(a,b,c),3,4,5
9) Bonds (Debt)
Characteristics and Valuation
- Readings: Ch. 6 HW: 6,9,15
10) Review
- Readings: Ch. 1-6
11) ***Exam #1***
- Readings: Ch. 1-6
12) W 10/12 Stock (Equity)
Characteristics
- Readings: Ch. 7 HW: 8,15,17,21
MIDTERM BREAK
No University classes held
13) Stock (Equity)
Valuation
- Readings: Ch. 7 HW: continued
14) Special Topics
15) Risk and Rates of Return
Defining and Measuring Risk, Capital Asset Pricing Model
- Readings: Ch. 8 HW: 9,11,15,16,17,18,19,22
16) Capital Budgeting Techniques
Payback, net present value, internal rate of return
· Readings: Ch. 9 HW: 12,13,15,16
17) The Cost of Capital
Weighted average cost of capital
· Readings: Ch. 11 HW: 8,17,18,19,21,22,23,24,27
18) Capital Structure
Business and financial risk, optimal capital structure, degree of leverage
· Readings: Ch. 12 HW: 10,13
19) Review
- Readings: Ch. 7-9, 11-12
20) ***Exam #2***
- Readings: Ch. 7-9, 11-12
21) Make Up Class
22) Dividend Policy
Signaling, stock splits, free cash flow
- Readings: Ch. 13 HW: 1,2,6,8,11
23) Working Capital Policy
Cash conversion cycle, short-term financing
- Readings: Ch. 14 HW: 7,8,10,11,12
24) Managing Short-Term Assets
Credit policy, managing receivables, inventory level and control
- Readings: Ch. 15 HW: 11(a,b,c),13
25) Managing Short-Term Liabilities
Accounts payable, short-term bank loans
- Readings: Ch. 16 HW: 3(a,b,c),5,7,8,10(a,b),12
26) Financial Planning and Control
Breakeven analysis, additional funds needed
- Readings: Ch. 17 HW: 4(a,b),6,8(a,b,c),12(a,b)
27) Review
- Readings: Ch. 13-17
28) ***Exam #3***
To take place during Final Examination Week.
- Readings: Ch. 13-17