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FI3300 Corporation Finance. Spring Semester 2010 Dr. Isabel Tkatch Assistant Professor of Finance. Agenda. Course syllabus Course calendar Other administrative details Kale & Fendler: Chapter 1 . Course Syllabus. Expectations Be here Ask questions Work practice problems Materials

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fi3300 corporation finance

FI3300 Corporation Finance

Spring Semester 2010

Dr. Isabel Tkatch

Assistant Professor of Finance

agenda
Agenda
  • Course syllabus
  • Course calendar
  • Other administrative details
  • Kale & Fendler: Chapter 1
course syllabus
Course Syllabus
  • Expectations
    • Be here
    • Ask questions
    • Work practice problems
  • Materials
    • Kale and Fendler, Lectures in Corporate Finance, 5th edition – read it and bring to class
    • Financial Calculator: Texas Instruments BA II Plus – bring to class every day
    • Lecture notes – on the web page
course syllabus4
Course Syllabus
  • Grading
    • 2 Midterm Exams @ 25% each
    • Comprehensive Final exam @ 30%
    • Quizzes and Assignments @ 20%
  • Make-up Policy
    • No make-up quizzes or exams
    • Everyone must take the final exam
    • No extra credit work to improve your grade
course syllabus5
Course Syllabus
  • Office Hours
    • Robinsons College of Business, 35 Broad Street, Room: 1241
    • Wednesday 4:00 PM – 5:00 PM
    • Drop-in, phone, e-mail and by appointment
learning objectives
Learning objectives
  • Understand why sound financial management is vital to the survival of a business
  • Identify 3 main subject areas in finance
  • Describe different forms of business organization
  • Identify the goal of the financial manager
  • Describe the basic difference between financial management and accounting
  • Understand the importance of cash and the relation between cash-flows and value
subject areas in finance
Subject Areas in Finance

Financial

Markets

Surplus

Units

Deficit

Units

Financial

Institutions

subject areas in finance9
Subject Areas in Finance
  • Investments
  • Corporate financial management
  • Financial markets & institutions

The 3 areas are linked together by the identification, management & valuation of risky cash flows.

subject areas in finance10
Subject Areas in Finance
  • Firms (deficit units) have ideas, but need capital to implement them: they borrow / raisecapital from deficit units to be able to buy the physical assets necessary for production. To do so, they issue financial assets against future cash flows their physical assets are expected to generate.
  • Investors (surplus units) purchase the financial assets, thus lending money to / investing in firms. They expect a positive return on their investment: the return is a function of future cash flows that the firm’s physical assets are expected to generate.
subject areas in finance11
Subject Areas in Finance

Financial Asset

Investors

Firms

Capital

the goal of corporate financial management
The Goal of Corporate Financial Management

Maximize Shareholders’ Wealth

The financial manager is the “agent” of the owners (shareholders) and they want to make money on their investment.

Maximizing shareholders’ wealth

=

Maximizing the stock price

financial management and the corporation s survival
Financial Management and the Corporation’s Survival
  • Excellent financial management cannot save a firm with a bad product, BUT…
  • Poor financial management can cause a firm to fail, EVEN IF it efficiently produces, markets and delivers a highly demanded product or service.
finance accounting
Finance & Accounting

Accounting

  • Historically based/ backward looking reports
  • Book value of the firm’s assets

Finance

  • Forward looking
  • Future cash flows

The use of Accounting statements for Financial Management

  • Evaluate the status of the firm
  • Use past data to predict future cash flows and estimate the value of the firm
the relation between cash and value
The Relation between Cash and Value

The value of a financial asset (investment)

is determined by

the stream of future cash flows

it generates for the investor

what have we learnt
What have we learnt?
  • Understand why sound financial management is vital to the survival of a business
  • Identify 3 main subject areas in finance
  • Describe different forms of business organization
  • Identify the goal of the financial manager
  • Describe the basic difference between financial management and accounting
  • Understand the importance of cash and the relation between cash-flows and value
what s next

FI 3300: Corporation Finance

Firm’s Financial Statements

Valuation

Accounting Review (2)

Time Value of Money (6, 7)

Statement of Cash Flows (3)

Capital Budgeting Basics (10)

Financial Securities & Markets (8)

Financial statement Analysis (4)

Valuation of

Bond & Stock (9)

Capital Budgeting Advanced (11)

Strategic Financial Management (5)

What’s Next?