Financial Management II - Linkeducare

Applications Course Catalogue

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In this course, we will explore techniques for maximizing firm value, through more effective budgeting of capital and through more efficient ways to the management of working capital, all the time while optimizing capital structure. As you learn to project a company’s financial statements for anticipating its funding needs, you will need to make big use of comprehensive firm analysis, to ensure your
projections are not too far removed from the company’s current financial position.

The affiliated University will issue a course completion certificate on course completion and if an online exam is passed. If no exam is taken, the affiliated University will issue a certificate of course attendance.

Syllabus BFIN 400

Course Content

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Cashflow Estimation 6 Presentations

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Understand the importance of cash flow and the distinction between cash flow and profits.

Identify incremental cash flow

Calculate depreciation and cost recovery

Understand the cash flow associated with the disposal of depreciable assets.

Estimate incremental cash flow for capital budgeting decisions

Topic 1 – Exercises

The Cost of Capital 7 Presentations

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Understand the different kinds of financing available to a company: debt financing, equity financing, and hybrid equity financing.

Understand the debt and equity components of the weighted average cost of capital (WACC) and explain the tax implications on debt financing and the adjustment to the WACC.

Calculate the weights of the components using book values or market values.

Explain how the capital budgeting models use WACC.

Determine the beta of a project and its implications in capital budgeting problems.

Select optimal project combinations for a company’s portfolio of acceptable potential projects.

Topic 2 – Exercises

Forecasting and Short-Term Financial Planning 6 Presentations

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Understand the sources and uses of cash in building a cash budget.

Explain how companies use sales forecasts to predict cash inflow

Understand how production costs vary in terms of cash flow timing.

Explain possible ways to cover cash deficits and invest cash surplus.

Prepare a pro forma income statement and a pro forma balance sheet.

Topic 3 – Exercises

Working Capital Management 6 Presentations

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Model the cash conversion cycle and explain its components.

Understand why the timing of accounts receivable is important and explain the components of credit policy.

Understand the concept of float and its effect on cash flow and explain how to speed up receivables and slow down disbursements.

Explain inventory management techniques and calculate the economic order quantity (EOQ).

Account for working capital changes in capital budgeting decisions.

Topic 4 – Exercises

Financial Ratios and Firm Performance 4 Presentations

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Financial Ratios and Firm Performance

Calculate and interpret financial ratios.

Compare different company performances using financial ratios, historical financial ratio trends, and industry ratios.

Topic 5 – Exercises

Dividends, Dividend Policy, and Stock Splits 7 Presentations

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Describe the life cycle of a business

Understand the different sources of capital available to a start-up business and a growing business.

Explain the funding available to a stable or mature business.

Explain how companies sell bonds in a capital market.

Explain how companies sell stocks in a capital market.

Examine some special forms of financing: commercial paper and bankers’ acceptance.

Describe the options and regulations for closing a business.

Capital Structure 7 Presentations

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Explain why borrowing rates are different based on ability to repay loans.

Demonstrate the benefits of borrowing

Calculate the break-even EBIT for different capital structures

Explain the appropriate borrowing strategy under the pecking order hypothesis

Develop the arguments for the optimal capital structure in a world of no taxes and no bankruptcy and in a world of corporate taxes with no bankruptcy costs

Understand the static theory of capital structure and the trade-off between the benefits of the tax shield and the cost of bankruptcy

Topic 7 – Exercises

Dividends, Dividend Policy, and Stock Splits 6 Presentations

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Understand the formal process for paying dividends and differentiate between the most common types.

Explain individual preferences and issues surrounding different dividend policies.

Explain how a company selects its dividend policy

Understand stock splits and reverse splits and why companies use them

Understand stock repurchases and dividend reinvestment programs

Topic 8 – Exercises

International Financial Management 4 Presentations

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Understand cultural, business, and political differences in business practices.

Explain individual preferences and issues surrounding different dividend policies.

Apply net present value to foreign projects

Topic 9 – Exercises