A83152 Corporate Finance

Scuola di Economia e Management
Syllabus
Academic Year 2013/14 First Semester

foto
Docente TitolareAndrea Tomaschu'
E-mailatomaschu@liuc.it
Office"Torre" (main tower), 7th floor
Phone0331 572208

Learning Objectives

At the end of the course the student will be able:

  1. To analyse the core concepts of corporate finance and the relationship with the other corporate areas;
  2. To design investment and financing policies;
  3. To identify the decision criteria for maximizing corporate’s capital structure;
  4. To carry on an M&A activity and to use company’s valuation methods;
  5. To identify the main financial sources for a firm, focusing on bank’s activity.

 

Information Literacy

At the end of the course the student will be able:

  1. To find information on the economic sectors;
  2. To find economic and financial information on businesses;
  3. To use financial statements databases;
  4. To develop a library research strategy;
  5. To set out a bibliography for reports.

Learning targets

At the end of the course the student will gain knowledge about the foundations of corporate finance, the optimal capital structure, cash management and financing choices, the time value of money and the company valuation techniques.

 

Information literacy

At the end of the course the student will be able to analyze a topic, produce research questions and write a bibliography to verify hypotheses.

Course Content

Financing policies are fundamental for firms in every step of their life cycle (development, change or crisis). Financing activity, therefore, must be continuous and systematic. In order to identify the best financing and investment policies, to take Working Capital decisions and to be able to carry on an M&A activity, course will provide appropriate coverage of the following topics:

  1. Financial statements analysis, asset conversion cycle and Working Capital management;
  2. Financial ratio analysis and cash flow calculation and interpretation;
  3. The investment decision, time value of money, actualization and capitalization;
  4. Capital budgeting techniques: NPV and IRR;
  5. The financial decision, risk and return relationship, Portfolio Theory and Capital Asset Pricing Model;
  6. The cost of capital: cost of debt, equity and WACC;
  7. The optimal capital structure: theory and empirical evidence;
  8. Basic of company’s valuation and techniques (Discounted Cash Flow analysis and Comparables analysis), an overview of Mergers and Acquisitions market;
  9. Enterprises and financial institutions: banks and commercial bank operations.

The aim is to provide students thorough knowledge of these issues, presenting characteristics, functioning, data and exercises.

 

Information Literacy

The course will provide appropriate coverage of the following topics:

  1. Documents and data for sector analysis;
  2. Research method: library research;
  3. Description of subjects through category analysis of terms employed in texts.

Course Delivery

The first part of the course (Sessions 1-8) focuses on financial statement analysis (1-4) and the financing decision (5-7). Attending students can take the mid-term written exam at Session 8. Concerning the second part (Sessions 9-15), the topics covered are the investment decision (9-10) and basic of company’s valuation (11-12). Attending students that took the first exam (mark at least equal to 16/30) can take the second written exam during the last session.

Course overheads will be published on the website of the course on “my.liuc.it”.

 

Information Literacy (Professor Cavaleri)

During the workshop the most important data banks and information sources providing business information will be introduced.
Groups of students will have to choose a topic, build a terminological map, focus on a specific aspect and finally develop a research hypothesis. At this stage an individual advice session with the library reference personnel is included. The last step will be setting out a bibliography for a report answering the research hypothesis developed by each student on their own. Testimonials could be invited to participate to classes.

Course Evaluation

Attending students can take the mid-term written exam. They can take the second written exam only if the mark of the first one is at least equal to 16/30. Attending students, whose mark in the mid-term written exam is not sufficient, have to take a global oral exam. It is possible to take global oral exam at the last session, during the second written exam. Students that don’t pass second written exam have to take a global oral exam.

Students must pass Information Literacy's exam to record the mark.

 

Information Literacy

Final written examination.

Students have to be present for at least 75% of class. They have to hand in all the assignments.

Syllabus

Session 1
18/09/2013
Time: 10:00
Hours of lesson: 3
Instructor: A. Tomaschu'

Topics:

The foundations of corporate finance: role and objectives.

Introduction to Financial Statement: balance sheet and income statement reclassification.

Readings:

Slides: Session 1

Session 2
25/09/2013
Time: 10:00
Hours of lesson: 3
Instructor: A. Tomaschu'

Topics:

Exercises (reclassification) – Ebitda and NFP calculation

Readings:

Slides: Session 2

Session 3
02/10/2013
Time: 10:00
Hours of lesson: 3
Instructor: A. Tomaschu'

Topics:

Continuation of Session 2

Financial Ratios (Profitability and Debt Ratios)

Risk and return relationship. Portfolio theory and Capital Asset Pricing Model

Readings:

Slides: Session 3

Session 4
09/10/2013
Time: 10:00
Hours of lesson: 3
Instructor: A. Tomaschu'

Topics:

The cost of capital: cost of debt and cost of equity, WACC

The optimal capital structure

Readings:

Slides: Session 4

Session 5
16/10/2013
Time: 10:00
Hours of lesson: 3
Instructor: S. Romiti

Topics:

Cash flow calculation: the importance of working capital

Exercises 

Readings:

Slides: Session 5

Session 6
23/10/2013
Time: 10:00
Hours of lesson: 3
Instructor: S. Romiti

Topics:

Cash management and financing choices

The debt market (including the issue of bonds) 

Readings:

Slides: Session 6

Session 7
30/10/2013
Time: 10:00
Hours of lesson: 3
Instructor: A. Tomaschu'

Topics:

Exercise (exam simulation).

Readings:

Slides: Session 7

Session 7
Group: Session 1 - Information Literacy
11/11/2013
Time: 09:00
Hours of lesson: 3
Instructor: P. Cavaleri

Topics:

Searching of information on the economic sectors.

Searching of economic and financial information on businesses.

Readings:

Data banks: AIDA

Specialistic web sites

Online lecture notes

Session 8
13/11/2013
Time: 10:00
Hours of lesson: 3
Instructor: A. Tomaschu'

Topics:

Mid-term written exam.

Readings:

Session 8
Group: Session 2 - Information Literacy
18/11/2013
Time: 14:00
Hours of lesson: 2
Instructor: P. Cavaleri

Topics:

Library research.

Focusing on a research subject, finding a research hypothesis and setting-out of a bibliography for a report.

Readings:

On line lecture notes

ABBOTT Andrew, I metodi della scoperta: come trovare delle buone idee nelle scienze sociali. Milano: Bruno Mondatori, 2007, pp. 73-80 ; 99-120.

GEORGE Mary, From research assignment to research plan. In: GEORGE Mary, The elements of library research: what every student needs to know. Princeton; Woodstock: Princeton University Press, 2008, pp. 14-63.

Further reading:

CANAVOR Natalie, Business writing in the digital age. Los Angeles: Sage, 2012.

LOMAS Robert, Mastering your business dissertation: how to conceive, research and write a good business dissertation. London: Routledge, 2011.

SPARKS FitzGerald Suzanne, Manager’s guide to business writing. 2nd ed. New York: McGraw-Hill, 2011.

Session 9
20/11/2013
Time: 10:00
Hours of lesson: 3
Instructor: S. Romiti

Topics:

The time value of money (Present Value), NPV, IRR – Exercises.

Readings:

Slides: Session 9

Session 10
27/11/2013
Time: 10:00
Hours of lesson: 3
Instructor: S. Romiti

Topics:

Introduction to company’s value and valuation techniques.

Readings:

Slides: Session 10

Session 11
04/12/2013
Time: 10:00
Hours of lesson: 3
Instructor: S. Romiti

Topics:

A real case of valuation.

Readings:

Slides: Session 11

Session 12
11/12/2013
Time: 10:00
Hours of lesson: 3
Instructor: S. Romiti

Topics:

Company’s internal and external growth – the M&A market.

Readings:

Slides: Session 12.

Session 13
18/12/2013
Time: 09:00
Hours of lesson: 4
Instructor: A. Tomaschu'

Topics:

Final written exam.

Readings:


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