Business Finance

This course is an undergraduate course in Business Finance, introduces you to concept of cash, time value of money, risk and return and net present value. The course covers also cash flow and the resulting financing decision. You will learn about debt and working capital and how to build a simple financial planning model.

 

• Introduce you to the world of Business Finance, both in business and entrepreneurial environment.
• Provide you with the skills to understand basic finance and make good financing decisions
• Prepare you for further Finance courses

Presence in class is mandatory. Bring your book to class. More than 2 absences leads to a failing grade

 

After this course you will be able to:

1) Define key factors associated with investing decision

2) Evaluate project by Calculating Net present value. Understand basic Financial Theory

3) Define the key concepts associated with financing decisions

4) Explain securities as sources of finance and how firms issue securities

5) Construct a simple financial planning model; trace a firm?s sources and uses of cash and evaluate its need for short term borrowing; decide whether it makes sense to give credit to a customer

 

There will be a mid-term exam and a final exam. In addition you are required to read the textbook and do individual homework, as assigned in class, which you will correct in the following class. Your class participation grade will depend on the quality of this work and the quality of the questions you ask in class. Come to class prepared to answer questions when called on. You will also be required to write a paragraph summarizing what you have learnt at the end of each class and be prepared to share it with the class when called on.

The final grade will be determined as follows:

Participation based on oral and written and homework 20%

Quiz 20%

Midterm 25%

Final 35%

 

Session 1

1. Kick-off. Sustainable development and finance and revision of basic math and accounting needed for course.

2. Ch 1 Goal and Governance of the Firm

Ch 2 Financial Markets and Institutions

 

Session 2

1. Ch 3 accounting and Finance

Interpret the information used in a balance sheet, income statement and statement of cash flow, accounting versus cash.

2. Ch 4 Measuring Corporate performance, Calculate and interpret key measures of corporate performance and of financial performance

 

Session 3

1. Ch 5 Time value of Money

Understand the present value of future payments

Compare interest rates quoted over different intervals

2. Ch 8 Net present value and other investment criteria, calculate NPV, internal rate of return (IRR), pay pack

 

Session 4

3. Ch 9 Project analysis, using discounted cash flow analysis to make investment decisions Capital investment, Operating cash flow: change in working capital

4. Ch 10 Project analysis, Practical problems and capital budgeting

Use sensitivity analysis and break-even analysis

 

Session 5

1. Ch 11 Introduction to risk and return and the opportunity cost of capital, Estimate the project cost of capital, market risk vs company specific risk

2. Revision for midterm

 

Session 6

Midterm exam on chapters 1-5, 8-11,(2 hours)

 

Session 7

1. Ch 13 The weighted cost of capital ( WACC)

2. Ch 14 Introduction to Corporate Financing

 

Session 8

1. Ch 15 Venture capital, IPO and seasoned offering

2. Ch 16 Debt Policy, Perfect capital markets and capital structure, Tax effect of debt policy, financial distress effects on debt policy

 

Session 9

1. Ch 17 Payout policy

2. Ethics, finance and history of Financial crisis, Cases, Enron, WorldCom and Tyco, 3 types of Financial scandals, A review of major financial crisis

 

Session 10

1. Ch 18 Long Term Financial Planning Estimate the effect of growth on the need for external financing Excel modelling and business plan: The Executive Fruit example(chapter 18)

2. Ch 19 short term Financial planning

Construct source and uses of cash and evaluate the need for financing

 

Session 11

Ch 20 Working Capital, understand the cash implication of working capital, decide whether it make sense to give credit to customer

 

Session 12

Revision for final exam.