Lectures - Financial Management
LECTURES: FINANCIAL MANAGEMENT
LECTURE 1: INTRODUCTION
Introduction to financial management,
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LECTURE 2: TIME VALUE OF MONEY
The Interest Rate, Simple Interest, Compound Interest,
Single amount, annuities and mixed flows,
Compounding more than once a year Semiannual and other compounding periods,
Continues compounding Effective, Annual interest rate Amortizing loan
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LECTURE 3: FINANCIAL STATEMENT ANALYSIS
Understand the purpose of basic financial statements and their contents.
FSA importance to the firm and to outside suppliers of capital.
Define, calculate, and categorize (according to liquidity, financial leverage, coverage, activity, and profitability) the major financial ratios and understand what they can tell us about the firm.
Define, calculate, and discuss a firm’s operating cycle and cash cycle.
Use ratios to analyze a firm's health and then recommend reasonable alternative courses of action to improve the health of the firm.
Analyze a firm’s return on investment (i.e., “earning power”) and return on equity using a DuPont approach.
Understand the limitations of financial ratio analysis.
Use trend analysis, common-size analysis, and index analysis to gain additional insights into a firm's performance.
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LECTURE 4: WORKING CAPITAL MANAGEMENT
Understand the two fundamental decision issues in working capital management -- and the trade-offs involved in making these decisions.
Discuss how to determine the optimal level of current assets.
Describe the relationship between profitability, liquidity, and risk in the management of working capital.
Explain how to classify working capital according to its “components” and according to “time” (i.e., either permanent or temporary).
Describe the hedging (maturity matching) approach to financing and the advantages/disadvantages of short- versus long-term financing.
Explain how the financial manager combines the current asset decision with the liability structure decision.
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LECTURE 5: ACCOUNT RECEIVABLES & INVENTORY MANAGEMENT
List the key factors that can be varied in a firm's credit policy and understand the trade-off between profitability and costs involved.
Understand how the level of investment in accounts receivable is affected by the firm's credit policies.
Critically evaluate proposed changes in credit policy, including changes in credit standards, credit period, and cash discount.
Describe possible sources of information on credit applicants and how you might use the information to analyze a credit applicant.
Identify the various types of inventories and discuss the advantages and disadvantages of increasing/decreasing inventories.
Describe, explain, and illustrate the key concepts and calculations necessary for effective inventory management and control, including classification, economic order quantity (EOQ), order point, safety stock, and just-in-time (JIT).
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LECTURE 6 : CAPITAL BUDGETING - CASHFLOWS ESTIMATION
Define “capital budgeting” and identify the steps involved in the capital budgeting process.
Explain the procedure to generate long-term project proposals within the firm.
Justify why cash, not income, flows are the most relevant to capital budgeting decisions.
Summarize in a “checklist” the major concerns to keep in mind as one prepares to determine relevant capital budgeting cash flows.
Define the terms “sunk cost” and “opportunity cost” and
explain why sunk costs must be ignored, while opportunity costs must be included, in capital budgeting analysis.
Explain how tax considerations, as well as depreciation for tax purposes, affects capital budgeting cash flows.
Determine initial, interim, and terminal period “after-tax, incremental, operating cash flows” associated with a capital investment project.
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LECTURE 7 : CAPITAL BUDGETING - TECHNIQUES
Define “capital budgeting” and identify the steps involved in the capital budgeting process.
Explain the procedure to generate long-term project proposals within the firm.
Justify why cash, not income, flows are the most relevant to capital budgeting decisions.
Summarize in a “checklist” the major concerns to keep in mind as one prepares to determine relevant capital budgeting cash flows.
Define the terms “sunk cost” and “opportunity cost” and
explain why sunk costs must be ignored, while opportunity costs must be included, in capital budgeting analysis.
Explain how tax considerations, as well as depreciation for tax purposes, affects capital budgeting cash flows.
Determine initial, interim, and terminal period “after-tax, incremental, operating cash flows” associated with a capital investment project.
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LECTURE 8 : SECURITIES VALUATION
Distinguish among the various terms used to express value.
Value bonds, preferred stocks, and common stocks.
Calculate the rates of return (or yields) of different types of long-term securities.
List and explain a number of observations regarding the behavior of bond prices.
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LECTURE 9 : OPERATING AND FINANCIAL LEVERAGE
Define operating and financial leverage and identify causes of both.
Calculate a firm’s operating break-even (quantity) point and break-even (sales) point .
Define, calculate, and interpret a firm's degree of operating, financial, and total leverage.
Understand EBIT-EPS break-even, or indifference, analysis, and construct and interpret an EBIT-EPS chart.
Define, discuss, and quantify “total firm risk” and its two components, “business risk” and “financial risk.”
Understand what is involved in determining the appropriate amount of financial leverage for a firm.
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