Financial Management Outline

https://www.ateneo.edu/sites/default/files/Fin%20105%20Syllabus.pdf

Course Description and Objective

Financial Management is an introductory finance course designed to make students understand basic finance concepts. The course involves studies on decision-making utilizing financial resources available to the firm from the perspective of the manager.

The course emphasizes the understanding of finance theory and working knowledge of the financial environment in which the firm operates in order to develop appropriate financial strategies. Hence, it covers the whole range of basic finance concepts, economics and financial environment, financial statement analysis, risk analysis, the valuation process, capital budgeting, and capital structure and dividend policy. It will also cover financial analytical tools, cash flow management techniques & working capital management.

Course Outline and Content

     An Overview of Financial Management (Chapter 1)

     Financial Statements, Cash Flow, and Taxes (Chapter 2)

             - Balance Sheet, Income Statement, Statement of Retained Earnings, Net Cash Flow, Statement of Cash Flows

              - NOPAT, Net Working Capital, Free Cash Flow

 Analysis of Financial Statements (Chapter 3)

           • Ratio Analysis

           • The Du Pont Equations

 Financial Planning and Forecasting (Chapter 4)

          • The Sales Forecast

          • The AFN Equation

 Financial Markets and Institutions (Chapter 5)

         • Financial Markets

         • Efficient Market Hypothesis

1st LONG EXAM 

Risk and Rates of Return (Chapter 7)

     • Stand-Alone Risk

     • Risk in a Portfolio Context

     • The Relationship between Risk and Rates of Return

     • Some Concerns about Beta and the CAPM

Time Value of Money (Chapter 8)

     • Future and Present Value; Ordinary Annuity, Annuity Due and Perpetuity

     • Effective Annual Interest Rate (EAR)

     • Loan Amortization

Bonds and Their Valuation (Chapter 9)

     • Key Characteristics of Bonds

     • Bond Valuation

    • Bond Yields – Yield to Maturity (YTM), Yield to Call (YTC), Current Yield

     • Annual and Semiannual Coupon Bonds

Stocks and Their Valuation (Chapter 10)

     • Common Stock

     • Constant Growth Stocks

     • Valuing Stocks Expected to Grow at a Nonconstant Rate

     • Valuing the Entire Corporation

     • Stock Market Equilibrium

     • Preferred Stock

2nd LONG EXAM 

The Cost of Capital (Chapter 11)

      • Cost of Debt, Preferred Stock and Retained Earnings

      • Cost of New Common Stock

     • Composite, or Weighted Average, Cost of Capital, WACC

The Basics of Capital Budgeting (Chapter12)

     • Payback Period, Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR)

Cash Flow Estimation and Risk Analysis (Chapter 13)

• Estimating Cash Flows for Evaluating Capital Budgeting Projects

Real Options and Other Topics in Capital Budgeting (Chapter 14)

3rd LONG EXAM 

Capital Structure and Leverage (Chapter 15)

    • The Target Capital Structure

    • Financial Risk

     • Determining the Optimal Capital Structure – The Hamada Equation

     • Capital Structure Theory – Trade-Off Theory, Signaling Theory

Distributions to Shareholders: Dividends and Share Repurchases (Chapter 16)

      • Establishing the Dividend Policy in Practice

      • Dividend Reinvestment Plans

     • Stock Dividends and Stock Splits

      • Stock Repurchases

Working Capital Management (Chapter 17)

       • The Cash Conversion Cycle

       • The Cash Budget, Cash Management Techniques

      • Inventory and Receivables Management

      • Sources of Short-term Financing – Bank Loans, Accounts Payable (Trade Credit)

Required Reading

 Brigham, Houston. Financial Management Fundamentals, 12thEdition. Cengage Learning Asia. 2011.

Brigham, Houston. Fundamentals of Financial Management, 10th Edition. Thomson Learning.2004. Brealey, Myers, Marcus. Fundamentals of Corporate Finance, 5th Edition. McGraw-Hill. 2007. Solely distributed by C&E Publishing, (1672 Quezon Ave, South Triangle, QC) 

 Keown, Martin, Petty, Scott.Financial Management Principles and Applications, 10th Edition. Prentice Hall. 2005.