FINC 332 Business Finance
Spring 2015
Loyola University Chicago—John Felice Rome Center
BUSINESS FINANCE (FINC 332)
Spring Semester 2015
Day & Time: Mondays/Wednesdays 5:00-6:15pm
Location: TBA
Prof. David Pollon
Email: davidpollon@yahoo.com
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: ACCT 201 (Financial Accounting), ECON 201 (Introduction to Microeconomics), and ISOM 241 (Business Statistics)
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 that follows. Textbook reading is required and is designed both to reinforce what is discussed in class, and to cover topics for which classroom time is insufficient.
End-of-Chapter Problems
Homework problems will be assigned for each chapter. These problems will not be collected or graded, but selected problems will be discussed in class. These problems mirror exam questions.
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 his 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.
Grading Scale
93-100 = A 86-88 = B+ 75-77 = C+ 63-67 = D+ below 60 = F
89-92 = A- 81-85 = B 71-74 = C 60-62 = D
78-80 = B- 68-70 = C-
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 and Brigham. 2013. CFIN3. South-Western, Cengage Learning. ISBN: 1-133-626408
Supporting / Optional Reading Material
Brigham, Eugene F. and Joel F. Houston. 2012. Fundamentals of Financial Management: ConciseEdition, 7th ed. Thomson South-Western *Chapters from this textbook are indicated in ( ).
Course Schedule
1) Monday, January 19, 2015 An Overview of Managerial Finance
Finance manager’s responsibilities, business ethics, agency relationships
- Readings: Chapter 1 (no homework) (1)*
2) Wednesday, January 21, 2015 The Financial Markets and the Investment Banking Process
Financial markets and institutions
- Readings: Ch. 3 (2)
3) M 1/26 Financial Statements
Balance Sheet, Income Statement, Cash Flow
- Readings: Ch. 2 (no homework) (3)
4) W 1/28 Analysis of Financial Statements
Ratio analysis
- Readings: Ch. 2 continued (4)
5) M 2/2 The Time Value of Money
Future value, present value
- Readings: Ch. 4 (5)
6) W 2/4 The Time Value of Money
Annuities, uneven cash flow streams
- Readings: Ch. 4 (5)
7) M 2/9 The Cost of Money
Interest rates
- Readings: Ch. 5 (6)
8) W 2/11 Bonds
Characteristics and valuation
- Readings: Ch. 6 (7)
9) M 2/16 ***Exam #1***
- Readings: Ch. 1-6 (1-7)
10) W 2/18 Stocks
Valuation and Characteristics
- Readings: Ch. 7 (9)
11) M 2/23 Special Topics
12) W 2/25 Special Topics
13) M 3/2 Risk and Rates of Return
Defining and measuring risk, Capital Asset Pricing Model
- Readings: Ch. 8 (8)
Course Schedule continued
14) W 3/4 Capital Budgeting Techniques
Payback, net present value, internal rate of return
- Readings: Ch. 9 (11)
MIDTERM BREAK
No University classes held week of March 9
15) M 3/16 Special Topics
16) W 3/18 Special Topics
17) M 3/23 The Cost of Capital
Weighted average cost of capital
- Readings: Ch. 11 (10)
18) W 3/25 Capital Structure
Business and financial risk, optimal capital structure, degree of leverage
- Readings: Ch. 12 (13)
19) M 3/30 Review
- Readings: Ch. 7-9, 11-12 (8-11,13)
20) W 4/1 ***Exam #2***
- Readings: Ch. 7-9, 11-12 (8-11,13)
No university classes held Monday, April 6 due to Easter Recess
21) W 4/8 Special Topics
22) M 4/13 Dividend Policy
Signaling, stock splits, free cash flow
- Readings: Ch. 13 (14)
23) W 4/15 Working Capital Policy
Cash conversion cycle
- Readings: Ch. 14 (15)
24) M 4/20 Managing Short-Term Assets
Credit policy, managing receivables, inventory level and control
- Readings: Ch. 15 (15)
25) W 4/22 Managing Short-Term Liabilities
Accounts payable, short-term bank loans
- Readings: Ch. 16 (15)
26) Special Makeup Day TBA Review
- Readings: Ch. 13-16 (14-15)
27) ***Exam #3***
To take place during Final Examination Week
- Readings: Ch. 13-16 (14-15)