FIN 360: Corporate Finance

Larry Schrenk, Instructor

Learning Objectives


By the end of this course a student should be able to explain, analyze, apply and, where relevant, calculate...

1.   What finance and financial markets are, their role in the firm and their function in the economy. (Topic 1, Chapters 1-2)

1.1.              The Nature and Function of Finance

1.2.              Forms of Business Organization

1.3.              Competing Interests in the Firm and the Market

1.4.              Financial Ethics

1.5.              Financial Markets

1.6.              Financial Institutions

2.   Financial statements using a variety of tools including financial ratios. (Topics 2 and 3, Chapters 3-4)

2.1.              The Income Statement (includes calculation)

2.2.              The Balance Sheet (includes calculation)

2.3.              The Statement of Cash Flows (includes calculation)

2.4.              Free Cash Flow (includes calculation)

2.5.              Financial Ratios (includes calculation)

3.   The role of time in valuation and time value of money problems. (Topics 4 and 5, Chapter 7)

3.1.              Time Value of Money (TVM) (includes calculation)

3.2.              Single Dollar Cash Flow Problems (includes calculation)

3.3.              Mixed Stream Cash Flow Problems (includes calculation)

3.4.              Annuities (includes calculation)

3.5.              Perpetuities (includes calculation)

3.6.              Non-Annual Cash Flow Problems (includes calculation)

4.   How interest rates are set and their function in the economy as well as calculate and convert returns between different forms. (Topic 6, Chapter 6)

4.1.              Determining Interest Rates

4.2.              Nominal vs. Real Rates (includes calculation)

4.3.              Term Structure of Interest Rates (includes calculation)

4.4.              Annualized Rates of Return and Conversions (includes calculation)

5.   The application of the probability measures to asset returns. (Topic 7, Chapter 8)

5.1.              Measures of Central Tendency: Mean, Median, Mode (includes calculation)

5.2.              Measures of Dispersion: Standard Deviation, Variance  (includes calculation)

5.3.              Measures of Dependence: Covariance and Correlation (includes calculation)

5.4.              Higher Moments: Skewness and Kurtosis

6.   The analysis of risk, the trade-off between risk and return, and the application of these to portfolio analysis. (Topics 7 and 8, Chapter 8)

6.1.              Risk-Return Trade-Off

6.2.              Total Risk

6.3.              Types of Risk: Market and Non-Market

6.4.              Diversification

6.5.              Risk in a Portfolio (includes calculation)

6.6.              The Capitol Asset Pricing Model (CAPM) (includes calculation)

7.   The function and features of bonds and bond markets as well as calculate the value and yield of bonds. (Topic 9, Chapter 7)

7.1.              The Characteristics and Economic Function of Bonds

7.2.              The Valuation and Yield of Bonds (includes calculation)

7.3.              Advanced Features of Bonds

8.   The function and features of equity (both common and preferred) and equity markets as well as calculate the value of both common and preferred stock. (Topic 10, Chapter 9)

8.1.              The Characteristics and Economic Function of Equity

8.2.              The Valuation of Common Shares (Dividend Discount Model)

8.2.1.         Constant Model (includes calculation)

8.2.2.         Growing Model (includes calculation)

8.2.3.         Mixed Model (includes calculation)

8.3.              The Valuation of Preferred Shares (includes calculation)

9.   The cost of capital for a firm. (Topic 11, Chapter 10)

9.1.              Weighted Average Cost of Capital (WACC) (includes calculation)

10.        The decision criteria used in capital budgeting. (Topic 11, Chapter 11)

10.1.           Payback Period (includes calculation)

10.2.           Discounted Payback Period (includes calculation)

10.3.           Net Present Value (NPV) (includes calculation)

10.4.           Internal Rate of Return (IRR) (includes calculation)

10.5.           Modified Internal Rate of Return (MIRR) (includes calculation)

11.        Theories of capital structure. (Topic 12, Chapter 13)

11.1.           Business vs. Financial Risk

11.2.           Theories of Capital Structure

12.        The distribution policies of the firm. (Topic 13, Chapter 14)

12.1.           Dividends (includes calculation)

12.2.           Share Repurchases (includes calculation)

12.3.           Stock Splits and Stock Dividends

13.        The need for working capital as well as calculate working capital for a project. (Topic 13, Chapter 16)

13.1.           Nature of Working Capital

13.2.           Cash Conversion Cycle (includes calculation)

13.3.           Elements of Working Capital

14.        The process of financial planning and forecasting. (Topic 14, Chapter 16)

14.1.           Sales Forecast

14.2.           Forecasting Pro Forma Statements (includes calculation)

14.3.           Analyzing Ratios (includes calculation)