Finance 511

                                                                                          Financial Management for MS

                                                                            

Instructor: Anthony Yanxiang Gu                                             Office: 115D South Hall

Telephone: 5368 (O)                                                                Email: gu@geneseo.edu

Office Hours:

 

Course Objective:

The course is designed to provide an advanced study of financial management techniques.  The class builds on concepts and material covered in Managerial Finance and will present financial theory, discus key financial analysis tools, and investigate the linkage between management decisions and their impact on the financial performance and economic value of the business.  The course requires students to investigate methods of corporate valuation, understand how options and other derivative securities are used by financial managers, and assess the implications of financing choices.  It also investigates issues of working capital management, dividend policy, and mergers and the market for corporate control.  Case studies are used to provide a link between the classroom and the real world.   

 

Style of Instruction: 

Given the small size of the class, it will be taught in a seminar style.  Students are expected to come to class prepared to discuss the assigned material and contribute to the class.  The class utilizes some "real-world" case studies that require thoughtful application of financial concepts and are designed to develop the problem-solving and communication skills required for success in the business world.  Students will solve the cases in groups and periodically present their analysis of cases in class. Students will also be expected to discuss and critique the presentations of their peers.     

 

Relationship to the School of Business Educational Objectives & Course Sequence:

• This course provides an in-depth exposure to the theory, tools and best practices of managerial finance.
• This course emphasizes critical thinking and financial decision making.
• Case studies are used to help demonstrate the complexity of business decisions and prepare students to make the transition from academics to the business world.
• Students will work in groups providing the opportunity to learn team building and leadership skills.
• Students will write up and present cases in class helping to develop effective written and oral communication skills.

 

Course Learning Objectives:

• Understand the major issues of working capital management including the trade-off between profitability and risk as it relates to changing levels of current assets and current liabilities.
• Understand the relationship among financial decisions, return, risk, and the firm's value.
• Define options and understand option pricing, option markets, the role of derivative securities in fund raising, and hedging various types of risk.
• Understand the basic strategies for the efficient management of cash and accounts receivable.
• Explain the characteristics of the various types of short-term financing available to a firm.
• Be able to evaluate the impact of changes in a firm's credit and collection policies.
• Understand inventory fundamentals, and the common techniques form inventory management.
• Understand the investment banking process and the steps involved in raising capital in the financial markets.
• Explain the potential return and risk of alternative capital structures and their linkages to market value, and other important capital structure considerations.
• Understand the major dividend theories and the key factors involved in formulating an appropriate dividend policy.
• Understand merger and leveraged buyout fundamentals, including basic terminology, motives for merging, and types of mergers.
• Understand the types and major causes of business failure and the legislation and procedures involved in reorganizing or liquidating a bankrupt firm.

 

Required Material:

1)Brigham and Ehrhardt, Financial Management, Theory and Practice, 13^th Edition, South-Western, 2011. ISBN-13: 978-1-4390-7809-9; ISBN-10: 1-4390-7809-2.

2)  Financial Calculator: Sharp EL-733A, 738 or HP 10B, Texas Instruments BAII Plus

 

Suggested Material:

The Wall Street Journal

 

Elements of the Grade:                                                         Points

Exam 1                                                                                         100

Exam 2                                                                                         100

Final                                                                                              110

Case Studies (25 points each part)                                       100

Research Paper                                                                           50   

Class Participation                                                                      40

Total                                                                                              500   

 

Exam Dates:

Exam 1                                     September 29

Exam 2                                     November 3

Final Exam                               December 10 at Noon

Grading Structure:

Percent Grade                          Letter Grade    

92.5 and above                               A

90.00 - 92.49                                  A-

87.50 - 89.99                                  B+

82.50 - 87.49                                  B  

80.00 - 82.49                                  B-

77.50 - 79.99                                  C+           

72.50 - 77.49                                  C

70.00 - 72.49                                  C-

60.00 - 69.99                                  D

Below  60.00                                  E

 

Research Paper:

Students will be required to write an in-depth research paper on a finance related topic discussed in class.

 

Homework:

Readings and problems will be assigned from TBA and cases will be assigned by the instructor.  Understanding the readings and problems enables the successful analysis of case studies and is critical to good examination performance.  Doing the homework will enable students to be prepared to participate and contribute to the class.  You may not always be able complete the homework problems, but go as far as you can so you know your shortcomings and can ask questions in class. 

 

Class Participation:

Students are expected to come to class prepared to participate. Class participation is given a significant weight in the grading for the class.  In addition to the case presentations, the class participation grade is determined by the level and quality of the student's participation in class throughout the semester.

 

 

Material to be Covered:

            Chapter

 5        Bonds, Bond Valuation

           Supplemental: Bond Portfolio Management, and Interest Rates

 7        Stocks, Stock Valuation

           Supplemental: Stock Market Efficiency

            Supplemental:   Securities Markets

8&23   Financial Options and Applications in Corporate Finance & Derivatives and Risk           Management

            Supplemental: Option Valuation

            11        Cash Flow Estimation and Risk Analysis

14        Distributions to Shareholders: Dividends and Repurchases

15        Capital Structure Decisions

16        Working Capital Management

20        Initial Public Offerings, Investment Banking, and Financial Restructuring

21        Mergers, LBOs, Divestitures, and Holding Companies

            24        Portfolio Theory, Asset Pricing Models, and Behavioral Finance

18    Lease Financing (if we have time)

 

Group Case Studies:

1.   Chapter end mini case, Chapters 11-20, 2 in each group, present after lecture on the chapter

2.     Caterpillar and Deer and Company have been expanding their overseas markets, and have been trying to reduce their Inventory and Accounts Receivables.

1.         Analyze their accounts receivables and inventory management; estimate the impact of reducing accounts receivable and inventory by 20 percent (on ROA, ROE, FCF, firm value…).

2.         Analyze their capital structure (maximize ROE and minimize WACC?)

3.         Value their stock prices

 

Due and presentation: December .

 

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. 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 with the name(s) who is (are) to receive credit in a pocket 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.

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.

 

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."