Course Syllabus

Course Description: Welcome to FNC 5110. This MBA core course introduces the theory of finance and the practices of financial management in the corporate setting. It will teach the graduate student how to make sound investing and financing decisions. Hence, it covers the whole range of finance concepts, economics and financial environment, financial statement analysis, risk analysis and the valuation process. It assumes familiarity in the use of spreadsheets and the financial calculator. Learning Objectives: At the end of the Course, the graduate students are expected to acquire the following: Gain an understanding of cash flows and financial analysis To understand the makeup of interest rates, risk and the time value of money in financial calculations To learn the techniques of valuing bonds and stocks and the risks associated with valuations To learn capital budgeting techniques, cash flow estimation and risks in capital budgeting To understand the components of capital, the cost of capital and leverage To learn how to manage working capital, cash and financing To introduce corporate financial planning, corporate restructuring and international finance Course Method: This course will primarily use the case method to study the practical aspects of important topics in financial management. We will apply some of the concepts and techniques learned in the class to actual situations. In addition to analyzing the specific financing problems or issues, we will consider how those issues relate to the strategic objectives of the firm. It will be important to examine the “big picture” assumptions that are used in the numerical calculations. This course also places emphasis on presentation and discussion skills. It will be important to explain your positions or arguments to each other and to try to argue for the implementation of your recommendations. Your presence and active contribution to in-class learning is vital if we are to have a lively and useful course together. This means being well prepared, contributing, listening, and building on others' ideas, being ready to disagree with others, and to develop your own position. It also means engaging other students in lively discussion, rather than just the instructor. Students can also add to the dialog by bringing interesting articles or actual cases from their readings in magazines, journals and newspapers that are relevant to the subject at hand. Everyone will be required to bring at least one article sometime during the term. If another student beats you to the punch on the same article, you will have to be more assertive when you open discussion the next time you try. Let's not all wait till the last minute. Class Procedure For each class, I will assign study questions concerning a case study. For most of the class period, we will consider these questions and the material in the case. Cases should typically be discussed in groups prior to the relevant class session, and every student must come prepared to open a discussion. I will typically not hand out the solution to cases. Cases are often ambiguous and different assumptions can lead to different solutions. In most cases, there is rarely one “correct” answer. However, there are good or bad ways about thinking about problems. Our objective is not to solve every problem without dispute but to learn how to frame and think about the underlying issues. Thus, tackling cases will involve understanding some conceptual material, working through some number crunching and doing intelligent guesswork. Different elements are less or more important in different cases. Students must develop the ability to distil the major issues, develop alternative strategies to deal with them, and evaluate pros and cons of each alternative in a coherent manner. Grades 30% - Class Case Write-ups The class shall be divided into groups of 3. Each group is required to turn in four case write-ups. I will choose the cases to be assigned to each group to ensure these are dispersed uniformly through the term. This means that you should probably turn in one write up every other week. The write-ups should be no longer than 2-4 pages, plus a few appendices or tables. Turn in the write-ups at the beginning of the class before a case is discussed. Hard copies should be given to me in class; please do not email the write-ups. In the write-ups, do not re-invent the wheel. No detailed background is needed in the write-up – a few lines should suffice. On the other hand, do not assume I am intimately familiar with every number in the case. Exercise judgment on what is necessary to make the write-up coherent. In any event, - Take a clear stand on the central case problem - Provide a recommended solution. Grading: 25% - Class Participation The give-and-take in class discussion forms an important component of learning. Accordingly, about a quarter of the course grade is based on class participation. Quantity and quality both count, the latter more than the former. 20% - Mid-term Exam The mid-term exam will typically test the student on their technical understanding of finance principles and applications to business decisions. Exam will consist of multiple choice and problems drawn from the material covered in class and the assignments up to that point. You will require a calculator for the exams. 25% - Final Exam There will be no early or late exams.There will be NO make-up exams; students not present at the final exam will fail the class, unless they provide a medical certificate. The exam is cumulative, covering the course material for the entire term. Calculator required. Required Text: Brigham & Houston, Fundamentals of Financial Management, 10th ed., Thomson South-Western Recommended Reading: CFO Magazine:reports monthly on current issues and practical know-how for CFOs in both private and public companies. Features include such topics as the latest trends in the capital markets and reviews of the hottest new software or spreadsheet templates that can be used in financial decision making. Asian Wall Street Journal: Fortune Magazine: Business Week: Financial Times: There may be additional readings brought to class, as relevant.

Course Content and Schedule:

Introduction to Finance The Financial System Interpreting Financial Statements Financial Planning and Forecasting Cashflow Estimation Fundamental Concepts Risk & Return Time Value of Money Principles of Asset Valuation Valuation of Known Cash Flows Valuation of Stocks Capital Budgeting Cost of Capital Capital Budgeting Decisions Real Options Capital Structure The Target Capital Structure Operating and Financial Leverage Dividend Policy Long Term Financing Going Public Lease Analysis Hybrid Financing - Convertibles & Warrants Mergers & Acquisitions Rationale of Mergers DCF Analysis Financing Mergers