International American University

FIN 500 Financial Management Syllabus

Course Title FIN 500 Financial Management Course Description This course explains financial control at the corporate management level with special reference to policies and practices required to plan and control the sources and uses of a firm's funds. Emphasis on working capital management and selection of alternative investment opportunities, funds acquisition, dividend policies, optimal debt-equity mix, and budgetary and related procedures as basic tools which provide data used by management for decision-making purposes. Credit Units/Hours Upon successful completion of this course, you will earn 3 semester hours of college credit. This course represents the equivalent of learning outcomes normally achieved through 45 hours of student classroom study or through distance learning instruction. Course Learning Objectives Upon completion of the course, students should be able to: Make capital budgeting decisions using cash flow estimates and incorporating other sources of cash, such as taxes and depreciation. Explain the impact of profit margin and overall firm profitability on capital budgeting decisions, particularly when outside financing may be required to be able to complete projects. Determine the impact of changes in cost of equity, cost of debt, the risk-free rate of interest, the tax rate, and the levels of debt and equity on the firm's balance sheet on the overall cost of capital and the effect on both project and firm profitability. Apply ratio and financial statement analysis skills to solve unstructured problems. Solve cases requiring integration across various finance areas. Textbook Text Title: Financial Management: Theory and Practice Publisher: Author(s): Edition: ISBN: Unit Unit Unit Unit Unit Unit Unit Unit Unit Unit Unit South-Western Brigham and Ehrhardt 13th, 2011 013-978-1-4390-7810-5 1: An Overview of Financial Management and the Financial Environment 2: Financial Statements, Cash Flow, and Taxes 3: Analysis of Financial Statements 4: Time Value of Money 5: Bond Valuation 6: Risk, Return, and the Capital Asset Pricing Model 7: Stock Valuation and Stock Market Equilibrium 8: The Cost of Capital 9: The Basics of Capital Budgeting: Evaluating Cash Flows 10: Cash Flow Estimation 11: Financial Planning and Forecasting Financial Statements

Unit 1: An Overview of Financial Management and the Financial Environment Financial management, Role of financial manager, Finance functions, Goal of the firm, Financial markets and institutions. Unit 2: Financial Statements, Cash Flow, and Taxes Financial Statements and Reports: The Balance Sheet, The Income Statement, Statement of Stockholders' Equity, Net Cash Flow, Statement of Cash Flows; MVA and EVA Unit 3: Analysis of Financial Statements Analysis of Financial Statements; Financial Analysis: Liquidity Ratios, Asset Management Ratios, Debt Management Ratios, Profitability Ratios, Market Value Ratios Trend Analysis; Common Size Analysis; and Percentage Change Analysis Tying- the Ratios Together: The Du Pont Equation Comparative Ratios and Benchmarking, Uses and Limitations of Ratio Analysis Unit 4: Time Value of Money Time Lines; Future Values, Present Values, Finding the Interest Rate, Finding the Number of Years, N Annuities: Future Value of an Ordinary Annuity, Future Value of an Annuity Due, Present Value of Ordinary Annuities and Annuities Due ;Finding Annuity Payments, Periods, and Interest Rates; Perpetuities Uneven, or Irregular, Cash Flows, Future Value of an Uneven Cash Flow Stream, Semiannual and Other Compounding Periods, Fractional Time Periods, Amortized Loans, Growing Annuities

Unit 5: Bond Valuation Key Characteristics of Bonds, Bond Valuation, Changes in Bond Values over Time, Bonds with Semiannual Coupons Bond Yields: current yield, capital gain yield, yield to maturity and yield to call Unit 6: Risk, Return, and the Capital Asset Pricing Model Concept and measurement of return and risks, portfolio return and risk, CAPM Unit 7: Stock Valuation and Stock Market Equilibrium Key Characteristics of common stock, Valuing Common Stocks; Valuing a Constant Growth Stock; Expected Rate of Return on a Constant Growth Stock, Valuing Non-constant Growth Stocks, Stock Valuation by the Free Cash Flow Approach, Preferred stock valuation Unit 8: The Cost of Capital The Cost of Capital, components cost of capital: Cost of Debt, Cost of Preferred stock, Cost of Common Stock: The CAPM Approach, Dividend-Yield-Plus-Growth-Rate, or Discounted Cash Flow (DCF) Approach , Over-Own-Bond -Yield -Plus-judgmental-Risk-Premium Approach; Composite, or Weighted Average, Cost of Capital, WACC, Factors That Affect the WACC Unit 9: The Basics of Capital Budgeting: Evaluating Cash Flows The Basics of Capital Budgeting: Evaluating Cash Flows, An Overview of Capital Budgeting, Net Present Value (NPV), Internal Rate of Return (IRR) , Modified Internal Rate of Return (MIRR), Profitability Index (PI), Payback Period, Unit 10: Cash Flow Estimation Estimation of initial investment (NCO), annual cash flow after tax (CFAT), Terminal cash flow of new project and replacement decision. Unit 11: Financial Planning and Forecasting Financial Statements Financial Planning' and Forecasting Financial Statements; Overview of Financial Planning, Sales Forecast, Additional Funds Needed (AFN) Method, Forecasted Financial Statements Method, Forecasting' When the Ratios Change