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Managerial Finance. MBA 632 P.V. Viswanath Comments for beginning of class Spring 2004. What we will do today (February 11). Go over issues from Feb. 4 Go over problems assigned last week Do Chapter 17 Do cashflow computation and examples with Lifeway Foods, Inc. (LWAY) Discuss Quiz 1

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Managerial finance

Managerial Finance

MBA 632

P.V. Viswanath

Comments for beginning of classSpring 2004


What we will do today february 11
What we will do today (February 11)

  • Go over issues from Feb. 4

  • Go over problems assigned last week

  • Do Chapter 17

  • Do cashflow computation and examples with Lifeway Foods, Inc. (LWAY)

  • Discuss Quiz 1

  • Evaluation

P.V. Viswanath


Issues from february 4
Issues from February 4

  • How to follow cashflows from all activities

  • Time value of assets

  • Definition and type of cashflows

  • Other determinants of growth potential

  • Can I begin to think in finance terms?

  • Find the values on the statement needed for the equations

  • How will the cashflows affect a company’s future?

  • What does the change in net working capital etc. mean to management – is it good or bad?

  • Why do we need the alternative way of computing cashflows?

  • Determining accurate market value of a firm

  • Identity vs. definition

P.V. Viswanath


Wishlist from feb 4
Wishlist from Feb. 4

  • Keep door open

  • Don’t speak so fast; ask students if they understand

  • Explain the calculations for cashflows

  • Speed up explanations in class

  • More problems practiced in class

  • Can’t you just call on volunteers? Don’t call students randomly; I am trying to write down my notes.

  • More detailed examples.

  • Real-life examples

  • End class early

P.V. Viswanath


Quiz 1
Quiz 1

  • Definitions of terms from Chaps 1, 2, 3, 17

  • Computation of cashflow numbers for a firm

  • Computation of financial ratios for a firm

P.V. Viswanath


Issues from march 3
Issues from March 3

-Slow down 

-Write more clearly on the board 

-A little hurried. I like the examples but they seem rushed 

-Make “revised” PowerPoint lecture notes available earlier than the day of class 

-Why is your lecture is quite different from the book. How can I concentrate on preparing for exams?

- How to calculate growth rates

P.V. Viswanath


Issues to keep in mind
Issues to keep in mind

  • Everything we do in class is related to other things.

  • When we do present value, you cannot forget financial statements

  • Since I want to focus on connections, so sometimes I go ahead. That’s why I went on to the issue of risk.

  • We will revisit things that are not clear; that’s why I solicit your comments.

  • We will certainly revisit statistics – mean, variance, correlation, etc.

P.V. Viswanath


What we will do today march 10
What we will do, today, March 10

  • Effective Annual Rate

  • Valuation of stock

P.V. Viswanath


What we will do march 24
What we will do March 24

  • Finish up Chapter 7 and what we need from Chapter 8.

  • Make sure you do all the assigned problems. There are not a lot of new concepts, so I will focus on doing problems.

P.V. Viswanath


Questions from march 10
Questions from March 10

  • Difference between rates

  • How to solve problems by myself

  • When would knowing the effective rate be useful?

  • Post solutions

  • Issues with quiz

    • Only one question

    • Tricky!

    • Why did we do problems just before quiz? Do it a week before quiz.

    • Less time on quiz; more time on problems.

P.V. Viswanath


Midterm
Midterm

  • Covering material on Chaps 2, 3, 4, 5 (limited to what was covered in class), 6 and 17

  • Three sections

    • Definitions

    • Short Questions

    • Problems

      • Chap 4 – Present Value

      • Chap 3 – Accounting Ratios

      • Chap 17 – Cashflow computations

      • Chapter 5 – Valuing Bonds

      • Valuing Stocks – using only the material that was covered in class

P.V. Viswanath


Midterm1
Midterm

  • Concepts you should know (non-exhaustive)

    • DuPont Identity

    • APR and EAR

    • CAPM – just the basics of the formula

    • Financial Ratios

    • Computation of Cashflows

    • Nominal and Real cashflow and interest rates

    • Agency Costs and Conflicts of Interests

    • Bond Pricing

    • Stock Pricing

P.V. Viswanath


Today march 24 and later
Today, March 24 and later

  • Go over Chapter 5 – Valuing Bonds

  • Focus on problems

  • Review sessions on Monday 3/29, Friday 3/26

P.V. Viswanath


Comments from april 14
Comments from April 14

  • Correlation and covariance

  • Variance and beta as risk measures

  • Beta and variance estimation

  • Stick to the book

P.V. Viswanath


Plan for april 28 and may 5
Plan for April 28 and May 5

  • Risk and Return

  • Overview of Capital Structure – Chap. 13, 14 for terminology

  • Chap. 15 in class

P.V. Viswanath


What we did this term
What we did this term

  • Focus on concepts and application – usefulness for a manager

  • Student focus – trying to ensure that the material is understood by students at the right conceptual level

  • Sensitivity to what students have understood, what they have not understood.

  • Special extra sessions

P.V. Viswanath


What we did this term1
What we did this term

  • Understand what should be the objective of the firm's managers.

  • Manipulate formulas based on the time value of money.

  • Interpret the firm's financial statements

  • Use cash flow information to evaluate a firm/project.

  • Use financial statement information to value stocks and bonds

  • Decide how to finance a firm on a basic level.

P.V. Viswanath


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