Finance 311 Managerial Finance

Instructor: Anthony Yanxiang Gu                                              

Office: 115D South Hall

Telephone: 5368 (O)                                                                 

Email: gu@geneseo.edu

Office Hours: ... T.Th., and by appointment.

 

Course Description

Financial management is an interesting, exciting and useful course. You will discover the theory and skills of financial management and simultaneously be involved in their applications. You will explore the macro and micro environments of finance, analyze the effects of technological advances and globalization on finance, discuss the social responsibilities and business ethics, pollution control, charitable contributions, legal and regulatory environment. Each day for the remainder of your life you will be exposed to financial and economic news in the printed and visual media. It is clear that an educated person needs to understand the basic concepts of financial management.    

Career opportunities in finance exist in three interrelated areas: (1) money and capital markets; (2) investments; and (3) financial management. A finance major may work for financial institutions as a credit analyst, a portfolio manager or a financial consultant, and for companies and governments as a financial analyst.

 

COURSE LEARNING OBJECTIVES:

• Describe the key activities of the financial manager within the firm.
• Understand the characteristics and features of corporate bonds, common and preferred stock, and the operation of the capital markets.
• Understand interest rate fundamentals and the basic relationship between risk and rates of return.
• Understand the basic components of a firm's financial statements and be able to analyze the performance of a firm utilizing financial ratio analysis.
• Understand the fundamentals of business taxation laws.
• Understand the concept of the time value of money and be able to apply it in financial decision making.
• Understand the basic risk, return, and risk measurement techniques and applications.
• Understand and apply the basic stock and bond valuation models.
• Understand the steps of the capital budgeting process, determine relevant cash flows, analyze capital budgeting projects using payback, NPV, and IRR analysis.
• Determine the cost of long-term debt, preferred stock, common stock, and the weighted average cost of capital.

 
RELATIONSHIP TO THE SCHOOL OF BUSINESS PROGRAMS AND EDUCATIONAL OBJECTIVES

• This course provides a thorough grounding in the principles, tools, and best practices of managerial finance.
• This course emphasizes critical thinking and financial decision making.
• This course will develop competence in written communication skills through case studies and projects.
• Students are prepared to make the transition from academics to the business world through the use of real world Wall Street Journal assignments and group case studies.

 

RELATIONSHIP TO THE SCHOOL OF BUSINESS PROGRAMS AND COURSE SEQUENCE:

This is a required course for all Accounting and Business Administration majors.  It builds on material from Accounting 102 and 103, and Econ 202.  It is a prerequisite for MGMT 312 Advanced Managerial Finance, MGMT 313 Security Valuation and Analysis, MGMT 316 International Finance, and MGMT 390 Strategic Management.

 

Prerequisite Requirements: You must have successfully completed the following prerequisites to remain registered: ACCT 102, ACCT 103, ECON 202 and Jr/Sr standing.

 

Required Material: Fundamentals of Financial Management 13th edition, by Brigham & Houston, Thomson South-western 2009, AND a business/finance calculator, (Sharp EL 733A, 738 or HP 10B, Texas Instruments BAII Plus).  There is an optional Study Guide available, which I recommend.

Internet Exploration: Websites will be provided for you to explore, which will help you learn more and apply what you learn to the real world. See the textbook.

 

Method of  Evaluation: A breakdown of the final grade is as follows:

                             Exams (Best 2 of 3, 100 each)                                                       200 pts. (40%)

                             Cumulative Final                                                                               130 pts. (26%)

                             Case Studies & Project (50, 50, 30)                                              130 pts. (26%)

                             Class Participation & Instructor prerogative                                   40 pts. (  8%)

                                                                                                                                           500 pts.(100%)

                 Letter grades will be determined 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 60-69                   E < 60        Normal rounding rules applied                                

 

Instructor prerogative includes work assignments, in-class projects, and class participation. Your ability to raise interesting and stimulating questions and issues is greatly appreciated. You need to report your class participation each week. Make-up exams will be given only in the case of a documented medical or other emergency.

 

Classroom Etiquette: Please refrain from private conversations with seatmates.  Not only is this rude, but distracting to the rest of your classmates.  You should only leave the room in the middle of the class if it is an emergency.  The class is only 50 minutes and you should plan on being present the entire time.  Bring tissues, beverage etc. with you if necessary.

 

Academic Integrity: While I encourage you to enhance the learning process through the use of study groups, all work submitted for a grade, whether in class or take-home, is to be an individual effort unless specifically stated otherwise.  Any behavior to the contrary will be construed as academic dishonesty (cheating).  The college policy states that a student engaging in academic dishonesty may be dealt with by the school as a disciplinary problem.  I adhere strictly to this policy and handle all incidents in a fair but severe manner.  Therefore, all precautions to prevent such difficulties will be taken in this class.

 

NOTES: You are responsible for all material presented and assignments given, even if you are not in class.  Any missed work will count as a zero unless altered by the instructor at his discretion.  Feel free to use my office hours, make an appointment or call me at home for any help.  Please do not wait until just before an exam to seek additional help.

 

TENTATIVE SCHEDULE

 

Date             Topic                                                                                                                     Readings

1/21     W    Introduction. An Overview of Financial Management                                     Chapter 1

1/23     F     Time Value of Money                     Statistics Tutorial                                        Chapter 2  

 

1/26     M    Time Value of Money                                                                                            Chapter 2

1/28     W   

1/30     F     Financial Statements, Cash Flow, and Taxes                                                Chapter 3

 

2/2       M    Analysis of Financial Statements                                                                       Chapter 4

2/4       W   

2/6       F     Discuss Case I

 

2/9       M    Financial Markets and Institutions.                                                                    Chapter 5

2/11     W   

2/13     F     Working Capital Management                                                                           Chapter 16

2/16     M    Working Capital Management                                                                            Chapter 16

2/18     W    Preview for the first Exam

2/20     F     EXAM I Chapters 1 - 5, 16

 

2/23     M    Feedback on Exam I               Interest Rates                                                    Chapter 6  

2/25     W Library Instruction                   

2/27     F     Interest Rates                                                                                                        Chapter 6

 

3/2       M    Bonds and Their Valuation.                                                                                 Chapter 7

3/4       W    Bonds and Their Valuation                                                                                 Chapter 7

3/6       F     Case I Due and Presentation

 

3/9       M    Risk, Rates of Return, CAPM                                                                               Chapter 8  

3/11     W    (Feedback on Case I) Preview for the second Exam

3/13     F     EXAM II Chapters 6 - 8                                 See you on March 23

 

3/23     M   (Feedback on Exam II) Stocks and Their Valuation                                         Chapter 9

3/25     W   

3/27     F

 

3/30     M    The Cost of Capital                                                                                               Chapter 10

4/1       W    Discuss Case II

4/3       F     The Basics of Capital Budgeting                                                                       Chapter 11

 

4/6       M    Other Topics in Capital Budgeting                                                                     Chapter 13

4/8       W                 

4/10     F      Capital Structure and Leverage                                                                        Chapter 14

 

4/13     M    Capital Structure and Leverage                                                                         Chapter 14

4/15     W    Preview for the third Exam

4/17     F      EXAM III Chapters 9 - 11, 13, 14

 

4/20     M    Feedback on Exam III and                                                                                  Chapter 15

4/22     W    Distributions to Shareholders: Dividends and Share Repurchases        Chapter 15

4/24     F      Case II Due and Presentation

 

4/27     M    (Feedback on Case II) Multinational Financial Management                     Chapter 19

4/29     W

5/1       F                                                                                                                                     Chapter 12, 17 ?

 

5/4       M     WSJ Project Due. Preview for the Final Examination                       

 

FINAL EXAM         Monday, May 11, 12:00 - 3:00 pm.

 

 

 

NOTE: All information in this syllabus and course schedule is tentative and subject to change.  Adjustments may be made as the course progresses to ensure adequate coverage of topics.

 

END of CHAPTER ASSIGNMENTS

 

The following questions and problems should be completed for each chapter. Homework will not be collected.  It is important that you do the homework.  The understanding of homework is critical to good examination performance.  The benefits of class time will depend on the quality of your preparation prior to class.  You may not always be able to complete the homework problems, but go as far as you can so you know your improvements and can ask questions in class.

 

You should complete Self-Test Problem #1 (Key Terms) for every chapter.

 

Chapter Assignments

   Chap 1                    Questions: 1-1, 1-7, 1-8, 1-9, 1-12

 

   Chap   2                  Questions: 2-1, 2-4, 2-5, 2-8,

                                     Problems:  2-2, 2-6, 2-8, 2-14

 

   Chap   3                  Questions: 3-3, 3-4, 3-6, 3-7

                                     Problems: 3-3 through 3-15

 

Chap   4                     Questions: 4-4, 4-5, 4-6, 4 -9

                                     Problems:  4-1, 4 -3, 4 -5, 4 -7, 4 -8

 

Chap 5                       Questions: 5-2, 5-3, 5-5, 5-8, 5-9

 

Chap 16                     Questions: 16-1, 16-2, 16-5

                                     Problems:  16-1, 16-3

 

Chap 6                        Questions: 6-1, 6-3, 6-4

                                     Problems:  6-1 through 6-11, 6-15, 6-17, 6-19

 

Chap 7                       Questions: 7-3, 7-4, 7-6

                                     Problems:  7-3, 7-5, 7-7, 7-9, 7-13

 

Chap 8                       Questions: 8-1, 8-2, 8-4

                                     Problems:  8-2, 8-3, 8-4, 8-5, 8-8, 8-9

 

Chap 9                       Questions: 9-2

                                     Problems: 9-1, 9-2, 9-3, 9-4, 9-9, 9-11

 

   Chap 10                  Questions: 10-2, 10-4

                                     Problems:  10-1 through 10-5, 10-8, 10-10, 10-13

 

   Chap 11                  Questions: 11-3, 11-4,

                                     Problem: 11-6, 11-7

 

Chap 13                    Questions: 13-4

                                    Problem: 13-2, 13-3

 

Chap 14                    Questions: 14-3, 14-7, 14-8                   

                                    Problems: 14-2, 14-5

 

Chap 15                     Questions: 15-3, 15-8                   

                                      Problems: 15-2, 15-3

 

Chap 19                    Questions: 19-2, 19-3, 19-4, 19-6

                                    Problems: 19-1, 19-2, 19-4, 19-7, 19-14

Group Case Study I

WHAT CAN YOU FIND IN FINANCIAL STATEMENTS?

 

The financial statements of Quaker Oats Company are provided. You are required to find the major changes in the trends of its operating results and the reasons for the changes.

Visit: www.quakeroats.com where you can find its current financial report and more.

Discussions Expected:

Calculate liquidity, debt, and profitability ratios, and show their trends.

What happened to its income, assets, debts, and cash flows during the periods and why?

What factors contributed to the big changes in its income, working capital (current and quick ratios, for example) and cash flows in the fiscal year of 1995?

Is there any relationship between the operating irregularity and 1997 net loss?

The company's strengths and weaknesses of the Company.

Your suggestions for improvements.

Due March 6

 

Group Case Study II

IS ONE STRONGER THAN THE OTHER? CAN YOU DO BETTER?

 

Financial Statements of Caterpillar Inc. and Deer and Co. Inc. are provided. You are required to do a thorough analysis of the two corporations and compare their strengths and weaknesses (Their products are similar).

Visit: www.cat.com and www.deere.com where you can find their current financial reports and more.

 

Discussions Expected:

Calculate asset management ratios (inventory, collection, fixed assets), and show their trends.

Analyze their inventory management and accounts receivable management.

What would be the effects if they could reduce their inventories by 20%? (ROA, ROE...)

What would be the effects if they could reduce their recievables by 20%? (ROA, ROE...)

Examine their capital structures and costs of capital (assume that the interest rate on short-term debt is 8.00%, on long-term debt is 10.0%).

Analyze their operation strategies (such as products, market areas...).

The company's strengths and weaknesses.

Comment and compare.

Your suggestions for improvements.   

Due April 24.

 

 

Individual Project

WALL STREET JOURNAL ASSIGNMENT

 

¨       Select a topic that will be covered in this class by reviewing either the course outline or the Contents pages of the text.  Research your topic by reading the Wall Street Journal on a regular basis.  These articles will be the basis of your report.  If you have any questions about the acceptability of your topic choice, please see me before proceeding.

You can subscribe the journal at student rate on line: http://info.wsj.com/college/student

 

¨       Present what you have learned about this finance topic in a 2-4 page (maximum) word-processed paper.  The style or design of the paper is up to you, but you must follow the guidelines below.

 

¨       Only articles dated since January 15, 2009 may be used.

¨       You must use a minimum of 3 articles (no maximum).

¨       At least one article must come from the 'Money & Investing" section (Section C) of the WSJ.

¨       Assume that I have not read the articles you use.  Don't simply refer to them, but explain what they were about and how they relate to your topic.

¨       Relate what you have learned in class to what you have learned by reading the articles.

Due May 4.

 

 

GENERAL NOTES

The case studies are group assignments. You are encouraged to form teams early, 4 in each, elect a team leader and coordinate your time and work. The Wall Street Journal Project is an individual project and is not to be completed in groups. Make sure all assignments are clearly labeled. The grading will focus on both contest and mechanics. Thirty percent of the grade will be based on writing mechanics.  The remainder of the grade will focus on how well the paper is written, your analysis of the topic and how well you synthesize the various reports and articles with classroom learning. Format and neatness will count.  Creativity is strongly encouraged. Use spreadsheets to assist analysis. Submit each assignment in a pocket folder. Make sure the names of all group members who are to receive credit appear on the outside of the folder. No late submission will be accepted.

 

Please abide by the following formatting rules.

 

1.       Use line spacing of 1.5, a 12-point font size and 1 inch margins

2.       Number all pages. Staple them.

3.       Your name and section time should be on the front page.

4.       Follow all normally accepted rules for footnotes (endnotes are also okay) and

             bibliography.  You may conserve paper by placing the footnotes (endnotes) and the                     

             bibliography on the same page.

 

You may find more information from relevant websites. You will find the case studies and project interesting and challenging. It is also exciting and rewarding. I will lead you through.

 

 

Accommodations:

 

"SUNY Geneseo will make reasonable accommodations for persons with documented physical, emotional or learning disabilities.  Students should consult with the Director in the Office of Disability Services (Tabitha Buggie-Hunt, 105D Erwin, tbuggieh@Geneseo.edu) and their individual faculty regarding any needed accommodations as early as possible in the semester."