ESF:MPF_AFAP Corporate Finance - Course Information

MPF_AFAP Corporate Finance and Financial Analysis

Extent and Intensity

2/2/0. 6 credit(s). Type of Completion: zk (examination).

Teacher(s)

Ing. Bc. Jana Hvozdenská, Ph.D. (lecturer)

Guaranteed by

Ing. Petr Valouch, Ph.D.
Department of Finance – Faculty of Economics and Administration
Contact Person: Mgr. Jana Nesvadbová
Supplier department: Department of Finance – Faculty of Economics and Administration

Timetable

Wed 12:00–13:50 P312

• Timetable of Seminar Groups:

MPF_AFAP/01: Wed 10:00–11:50 VT206, J. Hvozdenská

Prerequisites (in Czech)

(!NOWANY( MPF_FAPA Corporate Finance , MPF_FAAP Financial Analysis and Plan )) && (! MPF_FAPA Corporate Finance ) && (! MPF_FAAP Financial Analysis and Plan )

Course Enrolment Limitations

The course is only offered to the students of the study fields the course is directly associated with.

The capacity limit for the course is 13 student(s).
Current registration and enrolment status: enrolled: 0/13, only registered: 0/13

fields of study / plans the course is directly associated with

• Finance (Eng.) (programme ESF, N-FU)

Course objectives

The purpose of this course is to introduce techniques of financial analysis, with emphasis on topics in the corporate finance area.
This course aims to provide the students with the fundamental concepts, principles and approaches of corporate finance and financial analysis, enable the students to apply relevant principles and approaches in solving problems of corporate finance and financial analysis and help the students improve their overall capacities.
The students should have an understanding of fundamentals of economics and accounting.

This follow-up course requires previous knowledge about causality of information origin in a company resulting from its financial statements that are intended for external and internal users. It should allow students to understand financial outcomes, to enhance its informative value and to interpret it. Financial analysis and planning in companies is a very important part of financial management. It is also important for external agents interested in the information concerning the state of the company financial management. The course is, therefore, an important part of financial preparation for economists.

Learning outcomes

At the end of the course students should be able to: - understand the theory of corporate finance and apply it
- understand the theory of financial analysis and company planning and be able to use it;
- understand methods of financial analysis applicable to analysis of historic development of a company;
- understand methods of financial analysis applicable to monitoring the differences from a plan and prediction of a future company development;
- analyse and interpret economic results;
- recognize and qualify influences that have shaped these economic results

Syllabus

• * Thematic plan of lectures:
• * 1) Introduction to Corporate Finance. Financial management function. The nature and purpose of financial management. Financial objectives and relationship with corporate strategy. Stakeholders and impact on corporate objectives. Financial and other objectives in not-for-profit organizations.
• * 2) Financial management environment. The enonomic environment for business. The nature and role of financial markets and institutions. The nature and role of money market.
• * 3) Working Capital Management. The nature, elements and importance of working capital. Management of inventories, accounts receivable, accounts payable and cash. Determining working capital needs and funding strategies.
• * 4) Investment appraisal. Investment appraisal techniques. Allowing for inflation and taxation in investment appraisal. Adjusting for risk and uncertainty in investment appraisal. Specific investment decisions (lease or buy; asset replacement, capital rationing).
• * 5) Business finance. Sources of, and raising business finance. Estimating the cost of capital. Sources of finance and their relative costs. Capital structure theories and practical considerations. Finance for small- and medium-sized entities.
• * 6) Business valuations. Nature and purpose of the valuation of business. Models for the valuation of shares. The valuation of debt and other financial assets. Efficient market hypothesis (EMH) and practical considerations in the valuation of shares.
• * 7) Risk management. The nature and types of risk and approaches to risk management. Causes of exchange rate differences and interest rate fluctuations. Hedging techniques for foreign currency risk. Hedging techniques for interest rate risk.
• * 8) Introduction to Financial Analysis, Property and financial structure of company – material definition of selected parts of balance sheet in extended version (as statement informing about company financial state at particular date), supplements to financial statements in extended version, Profit and loss statement in extended version (as statement informing about effect of economic activities in targeted period)
• * 9) Cash flow statement – explanation of methodical procedures for preparation of cash flow statement in accordance with legislation in force, their comparison and assessment including changes that have increased its informative value, use of cash flow indicators for dynamic (retrospective) financial analysis and financial planning; Objectives and basic methodological instruments of financial analysis – function, phases, methodological principles and instruments used in financial analysis, users of financial analysis and their needs, external financial analysis;
• * 10) Extensive ratios of financial analysis – horizontal and vertical methods of financial analysis, cash funds and conception of fund concept of cash flow statement; Profitability ratios and their use - profitability ratios and their use, basic pyramidal factorization; Activity ratios – indicators monitoring parts of assets blocked in other than cash form in context of different impact on company profit;
• * 11) Indebtedness analysis – long-term solvency, fundamentals of financial structure in context of theoretical rules and methods of financial structure optimization, liquidity analysis – liquidity measurement; Indicators based on capital market data, indicators based on cash flow and net working capital;
• * 12) Prediction of financial tightness – Altmans Z-score, Index IN, Quicktest, Index bonity, Tafflers model, Beermans model;
• * 13) Aspects and creation of financial plan, long-term financial plan, short-term financial plan, basic methods for creation of financial plan, company budgets, traditional budget methods (incremental, ZBB, CMP) and new budget methods (PBB, KAIZEN, WCM and contingency attitudes);
• * Thematic plan of seminars:
• * All the seminars are conducted in an active form, i.e. practical exercises and case studies concerning above mentioned themes are solved there.
• * 1) Accounting and economics repetition, creating of pairs of students who will work together on the case study during the whole semester, choosing of the company for the case study. Introduction to Corporate Finance. Financial management function. The nature and purpose of financial management. Financial objectives and relationship with corporate stratégy
• * 2) Financial management environment. The enonomic environment for business. The nature and role of financial markets and institutions. The nature and role of money market.
• * 3) Working Capital Management. The nature, elements and importance of working capital. Management of inventories, accounts receivable, accounts payable and cash. Determining working capital needs and funding strategies.
• * 4) Investment appraisal. Investment appraisal techniques. Allowing for inflation and taxation in investment appraisal. Adjusting for risk and uncertainty in investment appraisal. Specific investment decisions (lease or buy; asset replacement, capital rationing). Time value of money, calculating of net present value, internal rate of return, discounting...
• * 5) Business finance. Sources of, and raising business finance. Estimating the cost of capital. Sources of finance and their relative costs. Capital structure theories and practical considerations. Finance for small- and medium-sized entities.
• * 6) Business valuations. Nature and purpose of the valuation of business. Models for the valuation of shares. The valuation of debt and other financial assets. Efficient market hypothesis (EMH) and practical considerations in the valuation of shares. Risk management. The nature and types of risk and approaches to risk management. Causes of exchange rate differences and interest rate fluctuations. Hedging techniques for foreign currency risk. Hedging techniques for interest rate risk.
• * 7) In-term test 1;
• * 8) Introduction to Financial Analysis, Property and financial structure of company – material definition of selected parts of balance sheet in extended version (as statement informing about company financial state at particular date), supplements to financial statements in extended version, Profit and loss statement in extended version (as statement informing about effect of economic activities in targeted period)
• * 9) Cash flow statement – explanation of methodical procedures for preparation of cash flow statement in accordance with legislation in force, their comparison and assessment including changes that have increased its informative value, use of cash flow indicators for dynamic (retrospective) financial analysis and financial planning; Objectives and basic methodological instruments of financial analysis – function, phases, methodological principles and instruments used in financial analysis, users of financial analysis and their needs, external financial analysis;
• * 10) Extensive ratios of financial analysis – horizontal and vertical methods of financial analysis, cash funds and conception of fund concept of cash flow statement; Profitability ratios and their use - profitability ratios and their use, basic pyramidal factorization; Activity ratios – indicators monitoring parts of assets blocked in other than cash form in context of different impact on company profit;
• * 11) Indebtedness analysis – long-term solvency, fundamentals of financial structure in context of theoretical rules and methods of financial structure optimization, liquidity analysis – liquidity measurement; Indicators based on capital market data, indicators based on cash flow and net working capital; Prediction of financial tightness – Altmans Z-score, Index IN, Quicktest, Index bonity, Tafflers model, Beermans model
• * 12) In-term test 2;
• * 13)Creation of financial plan – use of financial analysis for creating financial plan – case study;
• * Alternative overall in-term test;

Literature

required literature
• ACCA. Wokingham: Kaplan Publishing UK, 2016, xxx, 850. ISBN 9781784156817. info

recommended literature
• BREALEY, Richard A., Stewart C. MYERS and Franklin ALLEN. Principles of corporate finance. 8th ed. Boston: McGraw-Hill, 2006, xxviii, 10. ISBN 0072957239. info
• DAMODARAN, Aswath. Applied corporate finance. 3rd ed. Hoboken: John Wiley & Sons, 2011, xiv, 738. ISBN 9780470384640. info
• HOSKIN, Robert E. Financial statement analysis for non-financial managers : property and casualty insurance. Indianapolis: Dog ear publishing, 2011, 132 stran. ISBN 9781457504464. info
• WESTERFIELD, Randolph and Jeffrey F. JAFFE. Corporate finance. Edited by Stephen A. Ross. 7th ed. Boston: McGraw-Hill, 2005, xxxiii, 94. ISBN 0072829206. info

Teaching methods

Lectures, person-to-person seminars, data mining, ratios calculations, application of models of financial analysis, personal presentations

Assessment methods

The course is completed by a written exam. Admission to the exam is subject to passing two in-term tests, presenting a chosen topic and submitting and presenting a semester paper (case study) - both assessed “passed”.

* 2 in-term tests: 40 points in total, minimum to pass 24 points from each test
(if you will get less than 24 points from 1st of 2nd in-term test you will have a chance to write a replacement test consisting of everything we did during the whole semester - this will be held during the seminar last week of semester)
* presentation of chosen topic: from -2 to 2 points (depends on the quality of the preparation and presentation)
* presentation of case study: from -8 to 8 points (deepends on the quality of the case study and the presentation)
* active work during the seminars: 1 point for each seminar if you submit the solution of seminar paper in good quality and in time, otherwise 0 points (maximum per semester = 10 points)
* final exam: 50 points, minimum to pass 30 points (60%)
* FINAL GRADE: sum of all points you get during the whole semester (there is only half of the points from the in-term tests included)
If the total amount of all the points you have got during the semester will be bigger than 60 but you have got less than 30 points from the final exam you failed and must re-sit the final exam
A= 92 points and more
B= 84 - 91 points
C= 76 - 83 points
D= 68 - 75 points
E= 60 - 67 points
F= 59 points and less
* Maximum possible gain of points: 2*40/2+2+8+10+50=110
2 in-term tests/2+presentation of topic+case study+activity in seminars+final exam
All your points will be recorded in notebook in information system continuously during whole semester.

Any copying, recording or leaking tests, use of unauthorized tools, aids and communication devices, or other disruptions of objectivity of exams (credit tests) will be considered non-compliance with the conditions for course completion as well as a severe violation of the study rules. Consequently, the teacher will finish the exam (credit test) by awarding grade "F" in the Information System, and the Dean will initiate disciplinary proceedings that may result in study termination.

Language of instruction

English

Further comments (probably available only in Czech)

Study Materials
The course is taught annually.
General note: Předmět je ekvivalentní předmětu MPF_FAAP a může být za něj uznán. Také je ekvivalentem MPF_FAPA. This course is an equivalent to MPF_FAPA and MPF_FAPA.

Listed among pre-requisites of other courses

• MPF_FIFI Corporate Finance
  (!MPF_AFAP) && !NOWANY(MPF_AFAP) || (!MPH_FMAN)  

• Enrolment Statistics (Spring 2019, recent)
  
• Permalink: https://is.muni.cz/course/econ/spring2019/MPF_AFAP