chapter 1 notes

Topics: Corporate finance, Finance, Stock Pages: 12 (908 words) Published: October 13, 2014
BUSINESS FINANCE
FIN3000
Professor: Liuling Liu

General Information
1







Office: Room 206
Phone: 4193720267
E-mail: liulinl@bgsu.edu
Office Hours: 2:00 to 2:30 MW or by appointment
For each class, please try to…
Be here and on time
 Take notes in class


1

Required materials




Text: Brigham & Houston, Fundamentals of Financial
Management, Concise 7th Edition, Southwestern Publishing
Company, 2012.
Other Readings: Wall Street Journal, Economist, Bloomberg
Business Week, etc.

2

Grading policy
Attendance

10%

Quizzes (4)

5% each

Exams (2)

25% each

Course Projects (2)

10% each

Total

100%

3

Grading Policy
4









Quizzes cover: TVM, Bond, Risk, Stock
Exams are not cumulative
Course Projects: Financial Statement Case Study &
Projects Valuation Case Study
Attendance=( # you signed the attendance sheet / # I
handed out the attendance sheet) * 100
I will hand out practice questions after each chapter. I
will review them in class.
4

Financial Calculator
5

You must have a financial calculator for this course.
 You can choose any one of the following: Texas
Instrument BA II-Plus,TI-83, TI-84, Hewlett Packard
HP 10B,12C,17B, Sharp EL-733A
Please read the tutorial and watch the video carefully
(available on canvas) before we teach the “Time value
of money”.


5

TOPIC 1. AN OVERVIEW OF
FINANCIAL MANAGEMENT
6

Chapter 1
1-7











What is corporate finance?
Course objectives
Outline for Class
Forms of Business Organization
Balancing Shareholder Value and Society Interests
Intrinsic Values, Stock Prices, and Managerial Incentives
Important Business Trends
Conflicts Between Managers, Stockholders, and Bondholders
7

What is corporate finance




Every decision that a business makes has financial
implications, and any decision which affects the
finances of a business is a corporate finance decision.
Investment policy





Financing policy





How to estimate the present value of an investment?
How to value the riskiness of the investment?
Should you issue debt or equity or obtain bank loans?
If issue debt, should it be Long or short maturity? If you
choose equity, what are the trade-offs between common and
preferred stock?

Payout policy


How to disperse of excess cash?
8

Course Objectives
9






To give you the big picture of corporate finance.
To teach you how to apply the skills and techniques
in real world situations.
To teach you the process of coming out the right
answer to any finance problem you face.

9

Outline for Class
10

Topics
Chapter
Topic1. Introduction to Financial Management
Chapter1: Introduction, Overview of Financial Management
Topic2. Fundamental Concepts in Financial
Management
Chapter3: Financial Statements, Cash Flow and Taxes
Chapter4: Analysis of Financial Statements
Chapter5:Time Value of Money
Topic3. Financial Assets
Chapter6:Interest Rates & Chapter2:Financial Markets and Institutions Chapter7:Bonds and Their Valuation
Chapter8:Risk and Rates of Return
Chapter9:Stocks and Their Valuation
Topic4. Projects and Their Valuation
Chapter10:The Cost of Capital
Chapter11:The Basics of Capital Budgeting
Chapter12:Cash Flow Estimation & Risk Analysis
Topic5. Corporate Valuation
Chapter16:Financial Planning and Forecasting

10

Class procedures
11







The lecture material will focus on the major points introduced in the text. Reading the assigned chapters and having some
familiarity with them before class will greatly assist your
understanding of the lecture.
After the lecture, you should study your notes and work
relevant problems(Practice questions and cases).
Throughout the semester we will have review sessions after
the completion of each topic. In addition, I will also conduct the review sessions prior to each of the exam....
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