Financial Management

This is the first finance course for all business majors and for some it will be the only finance course you take. The key takeaways from this course are: the time value of money, net present value (NPV), the capital asset pricing model (CAPM), the weighted average cost of capital (WACC), the dividend discount model, free cash flow, and project management. Check my library for additional books, blogs, magazines, and movie recommendations.

Students need a financial calculator. I will be using a Texas Instruments BA II Plus in class.

Undergraduate Textbook: Corporate Finance 4e by Ivo Welch ISBN: 978-0-9840049-2-8
Fundamentals of Corporate Finance by Ross, Westerfield, and Jordan
Fundamentals of Financial Management Concise 7th Edition by Brigham and Houston

MBA Textbook: Corporate Finance by Ross, Westerfield, Jaffe, and Jordan
Financial Management Theory and Practice 15th Edition by Brigham and Ehrhardt

Assessment

  • Exams: midterm and final
  • Online Homework to be completed on the students’ schedule
  • Estimate Beta using Microsoft Excel
  • Capital Structure Project

Resources

  • University-specific resources
  • Fama/French Factors from Kenneth French’s website
  • Regression Basics – This is the bare minimum you must know about linear regression as an undergraduate business major regardless of what university you attend. It is located in the appendix of Introduction to Finance Analytics in my library.
  • NYU Corporate Finance by Aswath Damodaran

Topic Coverage

  • Financial Statements
    Core Financial Statements
    Financial Statement Analysis
  • The Time Value of Money
    Time Value of Money
    – Present Value
    – Future Value
    Effective Annual Rate (EAR)
  • Capital Budget Decisions
    Net Present Value (NPV)
    Internal Rate of Return (IRR)
    Modified Internal Rate of Return (MIRR)
    Payback Period
    Discounted Payback Period
    Profitability Index
    Incremental IRR
  • Bonds and Interest Rates
    Interest Rate Risk Premiums
    Inflation
    Bonds
    The Yield Curve
    Bankruptcy
    Forward Interest Rates
    Optional Topics: Credit Reports | Debt Buyers
  • Equity Valuation
    Relative Valuation
    The Dividend Discount Model
    Discounted Cash Flow Valuation
    – Free Cash Flow to the Firm
    – Net Working Capital (NWC)
    – – Sources and Uses of Cash
    – DCF using FCFF
    – Free Cash Flow to Equity
    – DCF using FCFE
  • Risk and Return
    Diversification and Portfolio Calculations
    Market Capitalization
  • The Capital Asset Pricing Model
    Capital Asset Pricing Model
    Systematic vs Idiosyncratic Risk
    Defining and Measuring Risk
    Beta
    Estimate Beta
    Equity Risk Premium
    Security Market Line
    Capital Market Line
  • Cost of Capital
    The Cost of Common Equity
    The Cost of Preferred Equity
    The Cost of Debt
    The Weighted Average Cost of Capital (WACC)
  • Capital Structure
    Capital Structure
    Homemade Leverage
  • Financial Planning
    The Cash Conversion Cycle
    Sustainable Growth
    Additional Funds Needed
    Factoring