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|Course Number:||BUSADMIN 3620|
|Course Name:||Corporate Finance (Online)|
|Course Description:||An introduction to the finance function and financial management of the firm, including techniques of financial analysis, working capital management, capital budgeting, the acquisition and management of corporate capital, and dividend policy. Analysis of how the financial manager influences the decision-making process within the firm.|
|Prerequisites:||Grade of "C" or better in ACCTING 2010 and completion of university math requirement.|
|Format:||Online (This course is also offered in print.)|
Upon completion of this course, you will be able to do the following:
- Understand basic terminology of finance.
- Calculate time value of money problems.
- Identify the determinants of interest rates.
- Analyze a firm using ratio analysis.
- Calculate the intrinsic value of a stock.
- Understand working capital management.
- Explain the risk/return relationship.
- Understand the capital budgeting process.
- Know how to employ five capital budgeting tools and identify the strengths and weaknesses of each tool.
Financial management involves the acquisition and utilization of funds and assets such that long-term shareholder wealth is maximized. As we have seen in the recent past, poor financial management can have severe adverse effects not only for shareholders but for other stakeholders such as employees, retirees, suppliers, customers, and in some cases, it can impact the entire industry and economy. There is a boom in entrepreneurship as talented employees realize that they would rather be self-employed. Whether you are a stakeholder or self-employed, having a basic knowledge of financial management is important. Lastly, some of the financial management tools and techniques we will be learning about in this course can also be applied to personal financial planning.
Corporations are required by the Securities Exchange Committee (SEC) to provide financial statements that accurately represent the firm's financial position to their shareholders. Specifically, the firm must provide the balance sheet, the income statement, the statement of cash flows and the statement of retained earnings. In this Unit, we will review what information each of these four statements provides investors and learn how to conduct ratio analysis.
The time value of money is an important cornerstone in financial theory because it used to value all financial securities. Specifically, the value of any financial security can be calculated by finding the present value of its future expected cash flows. This is how we will learn to value stocks and bonds in future lessons. We will be using our financial calculator to solve problems in this unit. There are five time value of money variables, one of which is optional (payment or annuity). In lesson 4, we will master time value of money problems using four of the five variables (excluding the payment or annuity). In lesson 5, we will learn how to solve problems that have a payment or annuity, such as loan problems.
Financial managers raise money in capital markets by issuing common stock, preferred stock or bonds. In this unit, we will learn how to value these financial assets, the financial markets in which these assets are traded, the financial institutions that facilitate the issuance of these financial assets and the factors that influence interest rates. The current level of interest rates can affect the decision of the corporation to either raise money by issuing bonds or selling stock. Interest rates have been very low for an unprecedented amount of time and it is important to realize that this is an anomaly and is unlikely to continue in upcoming years.
The positive risk/return relationship is one of the key tenets of finance. It is believed that the only way to earn more return is to bear more risk. In general, different risk asset classes tend to generate returns consistent with a positive risk/return relationship. In Lesson 9, we learn the basics of risk and return. In Lesson 10, we build on that foundation and learn about one of the key models in finance, the Capital Asset Pricing Model. This model is widely used in corporate finance and we will continue to use it in this course.
In this unit we learn how to perform two of the financial manager's most important responsibilities: determine what it costs to raise capital and to determine how to allocate the capital it has raised. The weighted average cost of capital (WACC) is how we determine what it costs the firm to raise money. The capital budgeting tools (NPV, MIRR, IRR, PI, payback and discounted payback) are the tools we use to assess whether or not projects should be accepted.
Equity investors earn a return from price appreciation or capital gains and dividend income. This unit focuses on learning more about what drives the dividend policy of firms.
Working capital is simply the current assets the firm has in place. In practice, the management of working capital is time-consuming part of the financial manger's responsibilities. Holding too many current assets is drain on the profitability of the firm. However, running short of current assets can be problematic as well, potentially even catastrophic. In part, managerial conservatism or aggressiveness, among other factors, plays a part in the manager's choice of how much working capital the firm holds.
Number of Exams: 15 quizzes for this course.
Number of Assignments: 2 assignments and 9 discussions for this course.
Number of Projects: 1 group assignment for this course.
Grade points for this course will be allocated based on the assignments, quizzes and your discussion participation.
15 Quizzes @ 20pts each: 300 points
9 Discussions @ 5 pts each: 45 points
2 Individual Assignments @10 pts each: 20 points
1 Group Assignment: 10 points
Total: 375 points
90% of total points are required for an A
80% of total points are required for a B
70% of total points are required for a C
60% of total points are required for a D
Expectations of Students:
- Quizzes and assignments completed are expected to be your own work.
- A financial calculator is required for this course.
- Discussion points will be based on amount of participation and quality of responses. (Quality does not mean lengthy responses; it refers to well thought out responses to the questions and to your classmates.)
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