Argosy University
COURSE SYLLABUS
B6022
Financial Management
Faculty Information
Faculty Name: Peter J. Sigiols
Campus: Chicago
Contact Information: 312-961-3966 or Email:
Office Hours: By Appointment
Course description: This course studies the conceptual framework for analyzing financial decisions based on contemporary principles of financial theory. The focus is on the development of corporate financial policy with emphasis on capital structure, cost of capital, and dividend policy. Students will examine discounting cash flow techniques, capital budgeting, and managing risk in investment decisions
Course Pre-requisites: None
Required Textbook:
Besley, S., and Brigham, E. F. (2007). Essentials of managerial finance with Thomson ONE. (14th ed.). Thomson Learning. ISBN: 0324422709
Course length: 7.5 Weeks
Contact Hours: 45 Hours
Credit Value: 3.0
Program Outcomes:
1. Communication
1.1. Oral/Written – Present business information orally and in writing using appropriate technology that is concise, clear, organized, supported, and persuasive in a professional manner appropriate to the business context
2. Critical Thinking/Problem Solving
2.1. Critical Thinking – Incorporate and synthesize information, theory, and practice in order to implement appropriate business actions
2.2. Problem Solving/Decision Making – Given a business situation, diagnose the underlying causes of the situation, evaluate possible solutions, and determine and defend appropriate course of action
2.3. Information Literacy – Access information from a variety of sources, evaluate the credibility of the sources, and apply that information to solve business problems
3. Team
3.1. Leadership – Describe the requirements of team members and leaders to work effectively and creatively in achieving team goals
3.2. Collaboration – Collect, categorize, and consider the views of all stakeholders
4. Ethics
4.1. Ethics – Identify the ethical principles related to personal and corporate behavior in specific business situations and explains the potential consequences
5. Diversity
5.1. Diversity – Identify the impact of both cultural and economic factors on the modern enterprise and explain the potential consequences
6. Analysis/Application
6.1. Applied Technology – Select and defend business technology solutions to typical business problems
6.2. Integration – Describe the interrelationship of the functional business areas of statistics, accounting, finance, marketing, operations, and strategy within the context of specific organizational goals
Course Objectives:
1. Analyze corporate financial statements in order to recommend both management and investment strategy. (Program Outcomes: 1.1, 2.1, 2.2, 2.3, 6.2)
2. Compute the relation of cash flow to the financial health of a business. (Program Outcomes: 1.1, 2.1, 2.2, 2.3)
3. Evaluate a high risk versus low risk investment project and explain why the expected rate of return of each should differ accordingly. (Program Outcomes: 1.1, 2.1, 2.2, 2.3)
4. Analyze and assess the value of stock for both individual companies and selected stock portfolios. (Program Outcomes: 2.1, 2.2, 2.3)
5. Utilize the technological tools, financial theories, and language of finance to communicate within the organization’s constituents both inside and outside the corporate setting. (Program Outcomes: 1.1, 6.1, 6.2)
Assignment Table
Topics / Readings / Assignments1 / § Overview of Managerial Finance
§ Financial Theories
§ Corporate Environment / From the textbook Essentials of Managerial Finance (13thed.), read the chapters listed below.
· Chapter 1: An overview of managerial finance
· Chapter 3: The financial markets: Markets, institutions, and interest rates / Assignment #1- Provide a 1½–2 page analysis on the following topic: How can financial managers create value through investment and financing decisions? Your analysis should be your own-original and free from plagiarism.
Additionally, post a second document, containing a biography of about 100 words, introducing yourself to your peers.
Spend some time reading the analyses and biographies of your peers; this will help you get to know them and their previous experiences with financial management. Respond in 100-150 words to at least one of your peers’ analysis, stating whether you agree or disagree with the point of view. Offer an alternative explanation if required.
Rethink your analysis based on the comments you received from your peers and enhance it, if required. Provide citations wherever required during your analysis and peer review, and follow APA guidelines for writing style, spelling, grammar, and citation of sources.
2 / § Financial Statements and Ratios
§ Cash Flow
§ Financial Planning and Control / From the textbook Essentials of Managerial Finance (13th ed.), read the chapters listed below.
· Chapter 15: Project cash flows and risk
· Chapter 18: Dividend policy
· Chapter 8: Financial planning and control / Assignment #1- In 1998, when IBM announced that it would repurchase $2.5 billion in stock, its price jumped 7%. Read more about this strategic step by IBM to answer the following questions:
What, in your opinion, are the main reasons for the jump in IBM's stock price?
How would the market have reacted if IBM had increased dividends instead?
If Intel makes the same announcement today, could we expect a similar reaction?
Provide citations wherever required. Put your answers on a one-page, double-spaced Microsoft Word document, formatted in Times New Roman 12 pt font. Follow APA style for writing style, grammar, spelling, and citation of sources.
Read the responses of at least two of your peers and comment on their analysis for each of the answers.
Assignment #2- Online Research. Use the Internet to research a company that was in the news for intentionally reporting fraudulent financial statements. The incident should not be more than a decade old. Write a two-page report on the company by including answers to the following:
What were the stated reasons the company engage in fraudulent financial reporting?
Why did the fraudulent financial reporting go undetected?
Analyze the immediate result of this instance of fraudulent financial reporting.
Analyze the impact of this instance of fraudulent reporting on the company’s stock prices.
If this company still in business, analyze the techniques adopted by the company to detect fraudulent financial reporting.
Provide citations wherever required. Follow APA guidelines for writing style, spelling, grammar, and citation of sources. Submit the report as a double-spaced Microsoft Word document formatted in Times New Roman 12 pt font.
Assignment #3- Case Study. As the finance manager in an automobile company, you have to present cash flow forecasts to your senior managers. Write a five-page paper illustrating how your company should forecast its cash flow. Consider the following points in your paper:
· What is the relevance of cash flow forecasts?
· Identify the cash flows you will consider when preparing the forecast.
· What are the differences between earnings and cash flow?
· Analyze the uncertainty of a cash flow forecast.
Provide citations wherever required. Follow APA guidelines for writing style, spelling, grammar, and citation of sources. Submit your recommendation as a double-spaced Microsoft Word document formatted in Times New Roman 12 pt font.
3 /
§ Risk Management
§ Rate of Return
§ Corporate Valuation
/ From the new textbook Essentials of Managerial Finance (13th ed.), read the chapters listed below.· Chapter 4: Risk and Rates of Return
· Chapter 6: Bond and Stock Valuation / Assignment #1: Investors measure portfolio risk by using RiskMetrics. RiskMetrics uses three approaches to calculate financial risk: covariance approach, historical simulation, and Monte Carlo simulation.
Write a two – three paragraph report on how you will calculate the following financial risks of a portfolio using RiskMetrics:
· Exposure
· Uncertainty
· Uncertainty and exposure
You must explain your rationale for selecting an approach for calculating the financial risks. Submit your report. Use constructive criticism to comment on a classmate's original post. Comment on his or her approach for calculating the financial risk. How will the financial risk differ when a different approach is used?
Provide citations wherever required during your analysis and peer review, and follow APA guidelines for writing style, spelling, grammar, and citation of sources.
4 / § Capital Budgeting
§ Cost of Capital / From the textbook Essentials of Managerial Finance (13th ed.), read the chapters listed below.
· Chapter 14: Capital budgeting techniques
· Chapter 16: The cost of capital / Assignment #1:
Use the Internet and the Argosy University online library to research the issue of outsourcing capital budget to a consulting firm. Select a company from any industry and post answers to the following questions:
Now assume that you are the manager in charge of capital budgeting in your company. Would you outsource capital budgeting or would you utilize internal resources? Explain your rationale. Describe one situation where outsourcing is definitely advantageous and one situation where using internal resources is a better approach.
Each response should be of two or three paragraphs. Support your responses with relevant citations. Follow APA guidelines for writing style, grammar, spelling, and citation of sources. In class, comment on at least two of your peers' responses. You can ask technical questions or respond generally to the overall experience.
Assignment #2: Paper Submission
Read the following scenario and compose a six-page paper on your analysis.
Your automobile component company is considering taking on a project that requires $10 million in preliminary funding (in other words, the project will acquire $10 million in costs before it becomes profitable). The company currently has $8.3 million in liabilities and $17.2 in assets. The company is midsized; it brings in $17.5 million per year and has 3,500 employees. Should the company undertake this project? Justify your opinion. In principle, undertaking a project involves making financial decisions that could make or break the project. How do you plan to finance the project? There are plenty of financing options, including: common stock, preferred stock, debt (many debt options), bank loans, and internal cash. Is there one financing mix that is better than the rest? Explain your rationale. Support your work with research.
Research the Internet to find out information on current rate of return on risk-free assets, beta, required return on market, and interest rate. Submit your paper as a Microsoft Word document, using Time New Roman 12 pt font, double-spaced. Provide an Excel sheet with numerical data and calculations wherever necessary. Make sure you follow current APA style. Your paper should also include a reference sheet for all of the sources you have cited.
5 / § Capital Structure
§ Dividend Policy / From the textbook Essentials of Managerial Finance (13th ed.), read the following chapters on capital structure and dividend policies:
· Chapter 17: Capital structure and leverage
· Chapter 18: Dividend policy / Assignment #1: Analysis
Select a firm of your choice and use the Internet to conduct research on the firm’s capital structure or dividend policy. Create a 10 – 12 slide PowerPoint presentation, detailing the structure/policy. Cite at least three outside resources for your presentation, and ensure the presentation is well-thought out and well-designed. Also comment on the firm’s structure/policy in terms of its strengths and weaknesses. Make suggestions for improvement. Follow APA guidelines for writing style, grammar, spelling, and citation of sources.
6 / § Key Financing Arrangements
§ Corporate Restructurings / From the textbook Essentials of Managerial Finance with Thomson ONE (13th ed.), read the chapters listed below.
· Chapter 2: Analysis of financial statements
· Chapter 21: Hybrid Financing: Preferred Stock, Leasing and Option Securities / Assignment #1 Research Activity
Respond to one discussion questions as assigned by the facilitator.
· Corporate Restructuring: Use the Internet to find a company that has undergone corporate restructuring. Read about how the company restructured, study the restructuring process, and analyze its advantages and disadvantages. Summarize the information and evaluate the restructuring effort. Was it the best way for the company to restructure? What would you have done differently? Submit your response in a two-page, double-spaced Microsoft Word Document formatted in Times New Roman 12 pt font. Your analysis should be your own-original and free from plagiarism. Provide appropriate citations wherever necessary. Follow APA guidelines for writing style, grammar, spelling, and citation of sources.
· Mergers and Acquisitions: Use the Internet to research the advantages and disadvantages of mergers and acquisitions. Cite real-life examples to support your points. Submit a two-page report, in a double-spaced Microsoft Word Document formatted in Times New Roman 12 pt font. Your analysis should be your own-original and free from plagiarism. Follow APA guidelines for writing style, grammar, spelling, and citation of sources.
In class, comment on at least two of your peers' responses. You can ask technical questions or respond generally to the overall experience. Be objective, clear, and concise. Always use constructive language, even in criticism, to work toward the goal of positive progress.
7 / § Stocks & Investment Portfolios / From the textbook Essentials Managerial Finance with Thomson ONE (13th ed.), read the chapters listed below.
· Chapter 13: Short-Term Financing
· Chapter 19: Common Stock and the Investment Banking Process / Assignment #1: Respond to the following discussion questions:
How much does a stock contribute to the risk of a portfolio?
How much does a stock contribute to the return of a portfolio?
Use the Internet to support your findings. Submit your answers in a two-page, double-spaced Microsoft Word Document formatted in Times New Roman 12 pt font. Your analysis should be your own—original and free from plagiarism. Provide appropriate citations wherever necessary. Follow APA guidelines for writing style, grammar, spelling, and citation of sources.
In class, comment on at least two of your peers' responses, stating if you agree or disagree their answers. Give reasons for your comments.
Assignment #2: Online Research
Next week, you will submit your final paper. To prepare your final paper, you will have to conduct an extensive research on the different topics you learned. Begin your research this week by identifying four journal articles on:
* Analysis of corporate financial statements
* Analysis of a company’s cash flow
* Evaluation of high- and low- risk investment projects
* Valuation of stock and stock portfolios
Use the Internet to identify the journal articles.
Review the journals and provide a summary for each in about 200 words. Follow APA guidelines for writing style, grammar, spelling, and citation of sources. Submit your summary as a double-spaced Microsoft Word document formatted in Times New Roman 12 pt font.
8 Mergers and Acquisitions
Final Paper
Instructions-
There are many factors that can influence the success or failure of a merger. Prior to merging with another company, managers should consider operational synergy, economies of scale, financial synergy, company valuation, cash flows, and tax savings. The various steps involved in a merger and the anticipated reactions from the different stakeholders of the merging companies must be critically analyzed. This will help to understand how the merger will proceed and the potential impact on different stakeholders.
There are multitudes of issues involved in a merger and the influence of these factors can be seen in real life examples. Use the Internet to find an example of a recent domestic merger. Review the following points and include your findings in the final paper.
* Analyze the financial statements, ratios, and cash flows of the two companies.
* Discuss how the two companies performed risk management.
* Discuss the valuation of the two companies. How did the valuation change after the merger?
* Identify the cost components for the merger.
* Analyze the capital budgeting for the merger.
* Analyze how the companies financed the merger.
* Discuss the new capital structure change after the merger.
* Analyze tax savings from the merger.
* Analyze the dividend policies pre- and post- merger.
* Analyze the stock price movements during and after the merger.
* Analyze the merger process.
* Discuss how the companies communicated the merger information to the different stakeholders.
* Analyze the reactions of the employees and other stakeholders.
Review at least five journals to support your points. Follow APA guidelines for writing style, grammar, spelling, and citation of sources. Compile your findings in a paper of 7–10 pages, as a double-spaced Microsoft Word document formatted in Times New Roman 12 pt font.
Prepare a seven-slide PowerPoint presentation that you will present at the company’s annual general meeting. Your presentation should highlight the benefits of the merger and your key concerns. Submit your paper and the PowerPoint presentation as your final paper.
Grading Criteria