10114126Corporate Finance
Course Information
Description
This intermediate-level course views finance from the perspective of the financial manager. Topics include techniques of financial analysis, forecasting and budgeting, operating and financial leverage, working capital management, the time value of money, cost of capital, long-term debt and stock financing, dividends and retained earnings. Students are expected to apply both principles of accounting and finance.
Total Credits
3
Course Competencies
  1. Solve annuity scenarios
    Assessment Strategies
    Math problems with Consumer/Business/Finance Applications using a Financial Calculator
    Criteria
    identify the characteristics of an annuity
    differentiate between the present and future value of an annuity
    calculate the present and/or future values of an annuity
    calculate the net present value and internal rate of return
    compute any unknown from given knowns in annuity scenarios
    apply ordinary annuity calculations to business/consumer/financial scenarios
    apply annuities due calculations to business/consumer/financial scenarios
    apply deferred annuity calculations to business/consumer/financial scenarios
    apply complex annuity calculations to business/consumer/financial scenarios
    apply forborne annuity calculations to business/consumer/financial scenarios
    answer with the precision of terms appropriate to the problem
    answer in the correct units of measure and labels

  2. Solve amortization scenarios
    Assessment Strategies
    Math problems with Consumer/Business/Finance Applications using a Financial Calculator and Spreadsheet Software
    Criteria
    calculate a loan payment
    calculate the amount of a sinking fund payment
    calculate the future value of the sinking fund
    calculate the periodic interest associated with a sinking fund
    create amortization tables are created manually and via spreadsheet
    answer with the precision of terms appropriate to the problem
    answer in the correct units of measure and labels

  3. Solve interest rate scenarios
    Assessment Strategies
    Math problems with Consumer/Business/Finance Applications using a Financial Calculator and Spreadsheet Software
    Criteria
    calculate nominal and real interest rates given appropriate data
    calculate the default risk premium
    define and chart the term structure of interest rates
    chart and interpret an inverted yield curve
    define quantitative easing
    define the pure expectations theory
    answer in the correct units of measure and labels

  4. Create financial statements
    Assessment Strategies
    Corporate Financial Statements including Income Statement, Balance Sheet and Cash Flow Statement, Excel Spreadsheet Software
    Criteria
    create an income statement in excel - given required information in a word problem
    create a balance sheet in excel – given required information in a word problem
    create a cash flow statement in excel – given required information in a word problem
    show connection and dependencies between the financial statements by using cell references in excel

  5. Analyze financial statements – horizontal/vertical analysis
    Assessment Strategies
    Corporate Financial Statements including Income Statement, Balance Sheet and Cash Flow Statement, Vertical/Common Size and Horizontal Statements, Excel Spreadsheet Software
    Criteria
    create a horizontal income statement in excel – (given an original statement);  interpret the results
    create a vertical/common size income statement in excel – (given an original statement);  interpret the results
    create a horizontal balance sheet in excel – (given an original statement);  interpret the results
    create a vertical/common size balance sheet in excel – (given an original statement);  interpret the results
    create a statement of stockholders equity – given relevant data
    compute the free cash flow – given relevant data

  6. Analyze financial statements – ratio analysis
    Assessment Strategies
    Corporate Financial Statements including Income Statement, Balance Sheet and Cash Flow Statement (Growth, Liquidity, Profitability, Debt Ratios), Excel Spreadsheet Software
    Criteria
    create profitability ratios: gross margin, operating margin, net margin %, asset turnover (average), ROA, ROE, interest coverage ratio;  interpret the results
    compute growth ratios – year-over-year revenue growth, operating income percent, EPS, net income % change);  interpret the results
    compute liquidity ratios – current ratio, quick ratio – (given an original statement); interpret the results
    compute leverage ratios- total debt ratio, long-term debt ratio, LTD to total capitalization, debt to equity ratio, LTD to equity ratio;  interpret the results
    compute efficiency ratios- inventory turnover, A/R turnover, average collection period, fixed asset turnover, total asset turnover;  interpret the results

  7. Analyze bonds and their valuation
    Assessment Strategies
    Bond related exercises with Consumer/Business/Finance Applications using a Financial Calculator and Spreadsheet Software
    Criteria
    identify parts of a bond and define how interpreted
    compute the price of a bond using a financial calculator
    compute the price of a bond using a excel
    compute the yield to maturity on a bond using a financial calculator
    compute the yield to maturity on a bond using excel
    compute price and yield for zero coupon bond using financial calculator and excel
    compute price and yield for perpetuity using financial calculator and excel
    define the contract language for the bond

  8. Analyze risk and rates of return
    Assessment Strategies
    Excel workbooks and calculator-based problems
    Criteria
    compute the value of a portfolio using the capital asset pricing model (CAPM)
    measure stand-alone risk using the coefficient of variation
    evaluate the risk and return for a stock portfolio by computing the expected value, variance and standard deviation
    develop the security market line and compute risk premium changes (also compute the impact of inflation)
    compute changes in a stock’s beta coefficient
    use historical information to estimate required returns

  9. Analyze stocks and their valuation
    Assessment Strategies
    Excel workbooks and calculator-based problems
    Criteria
    compute the price of a stock using the Gordon Growth model
    compute stock value using Constant Growth Model (calculator approach)
    compute stock value using Constant Growth Model (excel approach)
    compute stock value using Nonconstant Growth (calculator approach)
    compute stock value using Nonconstant Growth (excel approach)
    compute stock value using Corporate Valuation model (calculator approach)
    compute stock value using Corporate Valuation model (excel approach)

  10. Evaluate investing in long-term assets: capital budgeting
    Assessment Strategies
    Excel workbooks and calculator-based problems
    Criteria
    compute the weighted average cost of capital
    compute the optimal capital budget and the WACC
    compute the risk and the cost of capital and the cost of debt
    compute the cost of capital between projects and determine which is most advantageous to company
    compute the internal rate of return of multiple projects (also MIRR)
    compute the net present value of multiple projects
    compute the profitability index for multiple projects
    compute the payback period for multiple projects

  11. Perform cash flow estimation and risk analysis
    Assessment Strategies
    Excel workbooks and calculator-based problems
    Criteria
    compute the free cash flow versus accounting income
    evaluate the timing of cash flows and incremental cash flows
    identify sunk costs and opportunity costs associated with assets the firm owns
    compute a sensitivity analysis and create a template using excel
    compute a scenario analysis and create a template using excel
    compute a Monte Carlo simulation and create a template using excel

  12. Manage working capital
    Assessment Strategies
    Excel workbooks and calculator-based problems
    Criteria
    compute the firm's current assets financing policy using the maturity matching or self-liquidating approach
    differentiate between conservative, moderate and relatively aggressive approaches to current assets financing policies
    calculate the targeted cash conversion cycle
    compute the inventory conversion period
    compute the average collection period
    compute the payables deferral period
    forecast the cash flows for a monthly cash budget
    access how the credit policy will affect sales; document how to set up and implement the credit policy
    compute the accounts receivable and accounts payable cost of trade credit
    identify free trade credit versus costly trade credit and the impact
    compute the nominal annual cost of trade credit
    compute the effective annual cost of trade credit
    differentiate between the following short term credit alternatives: bank loan, line of credit, revolving credit agreement, commercial paper, secured loans