Financial Management, Finance 103

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Required Text:                      Essentials of Corporate Finance, Ross, Westerfield and
Jordan, McGraw-Hill, 4th Edition.
 
 
Opening Statement:  Welcome to Finance 103.  While this course is largely about the financial management of corporations, the subject matter has value to all students, as will be demonstrated throughout the term.  Moreover, the material, if you apply yourself, can actually be fun to learn.
 
Course Description:  This course will provide an understanding of the fundamentals of financial management.  For the purpose of presenting these fundamentals, we will assume that the goal of financial management is to maximize the value of the firm for its owners.  Stockholders expect nothing less of the managers who run their firm and so the focus of this course is on the value creation activities of management.
 
The major areas of study for the course are as follows:
 

  1. Understanding financial statements
  2. Risk and return
  3. Time value of money
  4. Valuation of securities
  5. Capital budgeting
  6. Leverage and Capital structure

 
Course Expectations: The objective of college level courses is to teach you know to think.  Life in the business world is about solving problems none of which are like the end-of-chapter problems in your text; however, these problems are a first step.  Learning how to think begins with understanding theory and so for each new topic encountered we will begin with a discussion of the relevant theoretical foundations.  It is essential to grasp these ideas before attempting to address problem solving.
 
Under most of the topic headings below, a basic list of learning outcomes is given.  However, please note that you will also be responsible for all definitions provided in the chapters that we cover.
 
This course is very demanding and will command considerable work on your part; typically 2-3 hours per day is required.  It is highly recommended that you read the assigned chapters carefully at least twice.
 
Calculators:  I strongly recommend purchasing a financial calculator. However, it must be noted that financial calculators require considerable effort on your part to learn how to use them. The burden of learning how to use them is on you.
 
Prerequisites: Financial Management is a combination of economics, mathematics, statistics, and accounting.  Prerequisites are Economics C051 and C052, Accounting 0001 and 0002, and Statistics C011 and C012.  Since these courses are prerequisites, the material that we will cover uses this knowledge as a foundation.
 
The mathematical requirements of this course can be considerable.  You are required to be proficient in the mathematics covered in the above statistics courses.  For example, you should be able to solve single equations for single unknowns, solve simultaneous equations for more than one unknown, and understand how to use basic statistical concepts.  The statistical concepts that you are required to understand are mean or expected value, variance, standard deviation, covariance and correlation.  Without a good understanding of the mathematical and statistical requirements, it will be very difficult for you to pass this course.  Examples are provided at the end of the course outline.
 
Class attendance: Class attendance is required and role will be taken, randomly. After three absences, not supported by a documented excuse, you will receive a zero for attendance.
 
Grade determination: There will be three exams in total, two exams during the term and a final exam.  The mid-term exams will weigh 30% each and the financial will weigh 30%.  Class attendance will account for 10%.  The final exam is cumulative.  The grading scheme is as follows:
 
A:        93 – 100
A-:       90 – 92
B+:      87 – 89
B:        83 – 86
B-:       80 – 82
C+:      77 – 79
C:        73 – 76
C-:       70 – 72
D+:      67 – 69
D:        63 – 66
D-:       60 – 62
F:         less than 60
 
 
 
 
No extra work will be given to make up a low grade in any exam after they are graded.  A grade of “Incomplete” will not be assigned unless the following conditions are both met:
 

  • You have successfully “C” or better) completed the first two exams and

your attendance is satisfactory.
 

  • You cannot, because of a documented medical emergency, complete the

remaining items before grades must be reported.
 
Also, please note that students who are caught cheating in an exam will be assigned an “F” grade for that exam.
 
Qualifications: I intend to follow the outline below as much as possible, given weather or other unforeseen events.  If for any reason I believe that it is in the best interest of the class, I reserve the right to amend this syllabus during the courses of the term.
 
E-mail: Please allow 48 hours for e-mail responses, except on weekends.  Any e-mails received after 12:30 Friday afternoon will be answered by the end of the day on the following Monday.  I also prefer e-mail to voice-mail.  Since I am often on multiple campuses, I find e-mail to be more convenient.
 
Blackboard: On Blackboard I post PowerPoint presentations that represent a basic skeleton of the class lecture.  These include most graphs and most equations so that you do not have to draw or copy these.  This means that you should expect to take notes in class.
 
Weekly assignments: Below each topic to be covered is the chapter assignment for the week. The exception is the first day of class.  In addition you must solve the end of chapter problems. These will not be handed in but it is your responsibility to attempt to solve them.
 
Students with disabilities: Any student who has a need for accommodation based on the impact of a disability should contact me in private to discuss the specific situation as soon as possible.  Contact Disability Resources and Services at 215-204-1280 in 100 Ritter Annex to coordinate reasonable accommodations for students with documented disabilities.
 

Course Outline

 

  • Introduction to Financial Management/Ethics in Finance, Chapter 1.

 

  • Financial Statements, Taxes and Cash Flow, Chapter 2.

 
Learning Outcomes:

  • Understanding financial statements and cash flow
  • Understanding the difference between profit and cash flow and how to estimate cash flow.
  • Understanding the impact of taxes and the difference between marginal and average tax rates.

 
Assignment: Problems 5, 6, 7, 8, 13, 19, and 21.
 

  • Working with Financial Statements, Chapter 3.

 
Learning Outcomes:
 

  • Know the meaning of the individual financial ratios as presented in the text.
  • Know how to interpret a given numerical value for each of the financial ratios.
  • Understand the basic DuPont analysis.
  • Know the difference between internal and sustainable growth.

 
Assignment: Problems 1-25.
 

  • The Time Value of Money, Chapter 4.

 
Learning Outcomes:
 

  • Know how to determine the present and future value of a lump sum payment.
  • Know how to estimate the return on an investment.
  • Know how to determine the number of periods required for a given sum of money today to grow to a given sum in the future.

 
Assignment: Problems 1-25.
 

  • Discounted Cash Flow Valuation, Chapter 5.

 
Learning Outcomes:
 

  • Know how to determine the future and present values of annuities.
  • Know how to determine the future and present values of uneven cash flows.
  • Know how to determine the present value of perpetuity.
  • Know how to estimate the annuity payment for future or present value sum.
  • Know how to estimate the rate that an annuity must earn in order to provide a given future or present value.
  • Know how to estimate the number of periods for a given annuity to provide a present or future value.
  • Know the difference between an annuity and an annuity due.
  • Know the difference between an APR and EAR and how to convert the APR to an EAR.

 
Assignment: Problems 1-20, 22, 23, 26 & 27.
 

  • Interest rates and bond valuation, Chapter 6.

 
Learning Outcomes:
 

  • Know what a coupon bond is.
  • Know how to estimate the value of a coupon bond as interest rates change (for both annual and semi-annual coupon payments).
  • Know how to estimate the yield to maturity.
  • Know the difference between nominal and real rates of interest.
  • Understand the concept of interest rate risk.
  • Understand the term structure of interest rates.

 
Assignment: Problems 1-14.
 

  • Equity markets and stock valuation, Chapter 7.

 
Learning Outcomes:
 

  • Know how to determine the value of common stock under the following conditions:

 

  • Zero grow
  • Constant growth
  • Non-constant growth
  • Super-normal growth
  • Understand the difference between a dividend yield and a capital gain yield.
  • Know how to determine the value of preferred stock.

 
Assignment: Problems 1-6, 8, 10, 11, 22 & 23.
 
*October 1st – Exam 1
 

  • Net Present Value and Other Investment Criteria, Chapter 8.

 
Learning Outcomes:

  • Rationale and mechanics of calculating the five featured criteria.
  • Investment decision rules for each.
  • Know what the NPV profile is, and how to interpret one.
  • Understand the shortcomings of payback and IRR.
  • Understand how the five criteria answer the two key questions of capital budgeting.

 
Assignment: Problems 1-20
 
 
 
 

  • Making Capital Investment Decisions, Chapter 9.

 
Learning Outcomes:
 

  • Know how to determine project cash flows.
  • Know how to apply the concepts of NPV and IRR to project cash flows.

 
Assignment: Problems 1-15.
 

  • Some Lessons from Capital Market History, Chapter 10.

 
Learning Outcomes:
 

  • Understand how to use the concepts of expected value, variance, and standard deviation is estimating risk and return on marketable securities.
  • Understand the concept of a risk premium and how they are estimated for various security classes.
  • Know the concept of market efficiency and the difference between weak form, semi-strong form, and strong form efficiency.

 
Assignment: Problems, Chapter 10, 1-11, 13-23.
 

  • Risk and Return, Chapter 11.

 
Learning Outcomes:
 

  • Understand the expected return and risk of a portfolio.
  • Know how these concepts differ from the expected return and risk of a single security.
  • Understand the concepts of systematic and unsystematic risk.
  • Know how diversification reduces unsystematic risk.
  • Understand the concept of beta and how it measures market or systematic risk.
  • Understand how the concepts of beta and market risk premium determine us to measure the required return to risky securities by the capital asset pricing model, CAPM.
  • Understand the security market line (SML) and how this is a graphical representation of the CAPM.

 
Assignment: Chapter 11, 1-19, 22-31.
 
 
*November 5th – Exam 2
 
 
 
 

  • Cost of Capital, Chapter 12

 
Learning Outcomes:
 

  • Know how to estimate the WACC.
  • Know the difference between market and book weights.
  • Understand the difference between a company’s cost of capital and a divisional or project cost of capital.
  • Understand source-determined vs. use-determined cost of capital

 
Assignment: Problems 1-13, 15-25.
 

  • Leverage and Capital Structure, Chapter 13.

 
Learning Outcomes:
 

  • Understand financial leverage.
  • Understand the static theory of capital structure.
  • Understand how corporate taxes impact the capital structure decision.
  • Understand the implications of bankruptcy on optimal capital structure.
  • Understand how to solve for break-even EBIT

 
Assignment: Problems 1-15.
 
 

  • Dividend Policy, Chapter 13. (Time Permitting)

 
Learning Outcomes:
 

  • Understand the dividend irrelevance proposition.
  • Understand how taxes and clienteles may impact the dividend decision and why taxes and clienteles should not impact the dividend decision.

 
Review for Final Exam
 

Final Exam – To Be Announ

 
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INTEGRATED CASE STUDY ANALYSIS: BABS

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Assignment Questions

Students will have to analyse the case study given to them and prepare a business report for 6000 words. Students are required to undertake the tasks given below.

Contents TASKS  
Executive Summary A short summary of the entire work 600 words
Chapter One Explain the Case study background, the statement of the problem, research questions and aims and objectives . 900 words
Chapter Two Description of the situation ( Case Brief) 900 words
Chapter Three Students to state the problems and explain the models/ theories /planning tools to be used to analyse the case. 1000 words
Chapter Four Findings from the analysis (using the tools) 1400 words
Chapter Five Solutions to the problem and issues. Recommendations and students to come out with a business plan. 1200 words

Notes:  References are expected in chapter 3-4 which have an academic content.
Layout: 4 cm left margin, 3cm-top, bottom and right margin; 1.5 line spacing; Times New Roman size 12;
This approximates to about  250-300 wds/page:  page limit chapters 1-6; 40-45 pages
 

 
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Management 120A

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The written analysis will be 4-5 pages in length, double-spaced and typed (12 point, letter size, with one-inch margin). You may include appropriate graphics, charts, etc. to enhance the content visually. The final product will be approximately 6-8 pages in length including cover page, graphics and reference list.
 
Case analysis content
Case analyses must be organized according to the ROPES framework conceptualized by Kelly (2001).  Each step, Research-Objectives-Programming-Evaluation-Stewardship, will form a major section of the analysis. The following is the required framework. Each section must be started with the required head.  Most – but not all – of the questions will be answered in the analysis:

  1. OVERVIEW OF CASE
  2. Who is the organization or client (location, type of activity pursued)?
  3. Who is the public relations firm hired to work with the organization?
  4. What is the problem that must be solved or opportunity to pursue?
  5. Was it a coalition of action? (Any other organizations partnered with the organization you studied?)
  6. Who are the target publics?
  7. RESEARCH
  8. Was research used to gain insight on (1) the organization, (2) the problem or opportunity, and (3) the publics?
  9. Were both secondary and primary research conducted?  Give examples.
  10. Were methods used for primary research informal, qualitative, or quantitative? Give examples.
  11.  What were the major findings of the research?
  12. Were the research methodologies used appropriate and adequate?  What more should have been done?

III.  OBJECTIVES

  1. What were the objectives; were they output or impact objectives?
  2. What effects were sought by the impact objectives?
  3. Did the objectives contain all five elements necessary for objectives to be meaningful?
  4.  Were the objectives consistent with the research findings?
  5. Were there objectives relative to each target public identified by the research?

 

  1. PROGRAMMING
  2. What was the budget for programming; what was the timeframe?
  3. What were the main features of the programming strategy (tactics/techniques used, messages, channels of communication, or other relevant factors)?
  4. Were the tactics/techniques (1) interpersonal communication, (2) controlled media communication, or (3) mass media (uncontrolled) communication? Give examples.
  5. To what extent were the programming activities related to the set objectives?
  6. EVALUATION
  7. What evaluation research was conducted?
  8. Did the evaluation only report measurement of output objectives, or did it also verify impact objectives?
  9. Was the evaluation appropriate and adequate?  What more should have been done?
  10. Was it possible to be sure that the results reported were attributable to the public relations effort, rather than to other factors existing at the same time as the problem-solving effort?

 

  1. STEWARDSHIP
  2. To what extent was stewardship considered?
  3. What should have been done to ensure that supportive publics would remain “friends” of the organization/client?
  4. How long the campaign has been sustained? What causes its termination?
  5. What one or two suggested tactics would you recommend for stewardship; for what publics?

 
VII.  CONCLUSIONS

  1. Brief summary of the analysis’ major points.
  2. Your final thoughts.

 
Paraphrase and use quotes sparingly. Quotation marks and attribution must be included when “using” Smith (2002) words (three or more consecutive).  The number of the page from which the quote was taken must follow all quotes.  For example: Hendrix and Hayes (2010) described the campaign as “one of the most successful” ever conducted (p. 73).
 
 

 
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ARUBAV2BA03 Business Analysis

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As part of the formal assessment for the programme you are required to submit a Business Analysis assignment. Please refer to your Student Handbook for full details of the programme assessment scheme and general information on preparing and submitting assignments.
Learning Outcomes:
After completing the module you should be able to:
 Demonstrate an understanding of how most effectively to prepare and
present
information in ways useful to decision makers
 Identify, collect and collate primary and secondary data from a range of
sources
 Apply a range of techniques to analyse data
 Utilise propriety software as an aid to decision-making and control
Your assignment should include: a title page containing your student number, the module name, the submission deadline and a word count; the appendices if relevant; and a reference list in Arden University (AU) Harvard format. You should address all the elements of the assignment task listed below. Please note that tutors will use the assessment criteria set out below in assessing your work.
Maximum word count: 3000 words
Please note that exceeding the word count will result in a reduction in grade proportionate to the number of words used in excess of the permitted limit.
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Assignment Task
Answer all the following questions.
Please note the following instructions:
• You may select any organisation upon which to base your answers but you are strongly recommended to select an organisation that you have worked for or one you feel you can research easily using the Internet and academic search engines. The latter approach is acceptable where you do not work for an organisation. It is also acceptable to base your answer on a case study.
• Where you are asked to supply MS Excel (or equivalent) material such as graphs and/or data tables please note these must be embedded as figures within the file and not shown as linked files (i.e. your assignment must be a single document in word or PDF format. Turnitin cannot accept multiple files or linked files).
Question 1
You have been asked to conduct a survey within your own organisation of your colleagues to gauge their response to the possibility of flexible working hours being introduced at the work place. In this context, explain the following:
a) Population
b) Sampling techniques
You must draw upon relevant theory, concepts and models and appropriate organisational examples.
In order to complete this task you will need to consider as a first step the factors outlined in the course materials, referring as a start to Primary Sources in the Introduction to Business Analysis unit and add relevant external academic sources to your answer.
(25 marks)
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Question 2
In respect of primary and secondary data compare and contrast the:
1) main differences of primary and secondary data
2) advantages and disadvantages of primary and secondary data
You must draw upon relevant theory, concepts and models and appropriate organisational examples.
In order to complete this task you will need to consider the factors outlined in the course materials, referring as a start to the lessons Primary Sources and Secondary sources in the Introduction to Business Analysis Unit and add relevant academic sources to your answer.
(25 marks)
Question 3
Drawing upon examples from your own organisation, or one with which you are familiar, select an appropriate recorded measure for five equal periods (such as turnover, profit, available from annual reports etc) and having obtained values over the 5 equal time periods calculate the following:
a) the mean
b) the mode
c) the standard deviation
You must include all of your manual calculations. Use an Excel spread sheet to verify your calculations and embed a copy of this spread sheet in your answer. Present the original data in a suitable graph.
In order to complete this task you will need to consider as a first step the factors outlined in the course materials, referring as a start to the Techniques to Analyse Data Unit and add relevant external sources to your answer.
(25 marks)
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Question 4
When it comes to making sound decisions using management information systems can be an important part of the process. Do you agree with this perspective and why?
You must draw upon relevant theory, concepts and appropriate organisational examples to inform your answer.
In order to complete this task you will need to consider the factors outlined in the course materials, referring as a start to the Management Information Systems unit and add relevant external academic sources to your answer.
(25 marks)
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Formative Feedback
You have the opportunity to submit a draft of your response to Question 1 prior to submission to receive formative feedback.
The feedback is designed to help you develop areas of your work and it helps you develop your skills as an independent learner.
Your work must be submitted to your module tutor by email using the email address on the module page on or before two weeks prior to the assessment submission date. This is to allow time for you to reflect on the feedback and draft your final submission.
Formative feedback will not be given to work submitted after the above date.
Guidelines
You MUST underpin your analysis and evaluation of the key issues with appropriate and wide ranging academic research and ensure this is referenced using the AU Harvard system. The My Study Skills Area contains the following useful resources:
Guide to Harvard Referencing http://moodle.bl.rdi.co.uk/guides/HarvardRef/AU_Harvard_Quick_Ref_Guide.pdf Guide to Harvard Citation http://moodle.bl.rdi.co.uk/guides/HarvardRef/AU_Guide_to_Harvard_Citation.pdf
You must use the AU Harvard Referencing method in your assignment.
Additional notes:
Students are required to indicate the exact word count on the title page of the assessment.
The word count excludes the title page, executive summary, reference list and appendices. Where assessment questions have been reprinted from the assessment brief these will also be excluded from the word count. ALL other printed words ARE included in the word count. Printed words include those contained within charts and tables. See ‘Word Count Policy’ on the homepage of this module for more information.
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Assignments submitted late will not be accepted and will be marked as a 0% fail.
Your assessment should be submitted as a single Word (MS Word) or PDF file. For more information please see the “Guide to Submitting an Assignment” document available on the module page on iLearn.
You must ensure that the submitted assignment is all your own work and that all sources used are correctly attributed. Penalties apply to assignments which show evidence of academic unfair practice. (See the Student Handbook which is on the homepage of your module and also in the Induction Area).
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