Financial Management

This is the first finance course for all business majors and for some it will be the only finance course you take. The key takeaways from this course are: the time value of money, net present value (NPV), the capital asset pricing model (CAPM), the weighted average cost of capital (WACC), the dividend discount model, free cash flow, and project management. Check my library for additional books, blogs, magazines, and movie recommendations.

Students need a financial calculator. I will be using a Texas Instruments BA II Plus in class.

Undergraduate Textbook: Corporate Finance 4e by Ivo Welch ISBN: 978-0-9840049-2-8

Fundamentals of Corporate Finance by Ross, Westerfield, and Jordan

Fundamentals of Financial Management Concise 7th Edition by Brigham and Houston

MBA Textbook: Corporate Finance by Ross, Westerfield, Jaffe, and Jordan

Financial Management Theory and Practice 15th Edition by Brigham and Ehrhardt

Assessment

  • Exams: two midterms and a final
  • Online Homework to be completed on the students’ schedule
  • Estimate Beta using Microsoft Excel
  • Capital Structure Project

Resources

  • University-specific resources
  • Fama/French Factors from Kenneth French’s website
  • Regression Basics – This is the bare minimum you must know about linear regression as an undergraduate business major regardless of what university you attend. It is located in the appendix of Introduction to Finance Analytics in my library.
  • NYU Corporate Finance by Aswath Damodaran

Topic Coverage

Financial Statements

The Time Value of Money

Capital Budget Decisions

  • Net Present Value (NPV) – Edspira
  • Internal Rate of Return (IRR) – Edspira
  • Modified Internal Rate of Return (MIRR)
  • Payback Period – Edspira
  • Discounted Payback Period
  • Profitability Index – Edspira
  • Incremental IRR – Edspira

Bonds and Interest Rates

Equity Valuation

  • Relative Valuation – Rush
  • The Dividend Discount Model – Rush | Edspira
  • Discounted Cash Flow Valuation
    • Free Cash Flow to the Firm – Edspira
    • Net Working Capital (NWC) – Edspira
    • DCF using FCFF – Edspira
    • Free Cash Flow to Equity
    • DCF using FCFE

Risk and Return

  • Diversification and Portfolio Calculations – MIT

The Capital Asset Pricing Model

Cost of Capital

  • The Cost of Common Equity
  • The Cost of Preferred Equity
  • The Cost of Debt
  • The Weighted Average Cost of Capital (WACC) – Edspira

Capital Structure

Financial Planning

  • The Cash Conversion Cycle
  • Additional Funds Needed