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BA 360 – Introduction to Financial Management

Instructors

 

Raymond M. Brooks

 

For syllabus click on instructor’s name

 

COURSE CATALOG DESCRIPTION

Role and functions of a financial manager in the modern business environment in which a manager operates; formulation of financial objectives and policies; financial analysis, forecasting, planning, and control; asset management; capital budgeting; acquisition of funds through borrowing, stock issue, and by internal means; and international aspects of finance.

 

PREREQUISITES

 

(1) ECON 201:  Introduction to Microeconomics

(2) BA 213 Managerial  Accounting  or BA215 Money & Investment Management

(3) Junior Standing  

 

Using a Financial Calculator

Calculator help is available at Financial Calculator Guide. Click on Using Business and Financial Calculators and find your personal calculator. Instructions are available on using basic financial functions.

 

MEASURABLE  LEARNING OUTCOMES

 

Understand the fundamental theories, concepts, and tools of finance, including time value of money valuation techniques, the relationship between risk and return, and the use and interpretation of financial statements.

 

Apply financial management concepts and tools to the decisions faced by a manager, including:

·         Investment decisions

·         Financing decisions

·         Working capital management decisions

·         Financial analysis and planning.

 

 

Fundamental Theories, Concepts, and Tools

Explain the concepts of discounting and compounding.

Find the present value and future value for a single cash flow, series of cash flows, annuity, and perpetuity.

Develop a loan amortization schedule.

Calculate an APR (annual percentage rate) and an EAR (effective annual rate).

Use TVM to value assets such as common stock, preferred stock, and bonds.

Describe and explain the variety of interest rates.

Identify and explain the factors that determine interest rates and the yield curve.

 

Calculate the historical return average and standard deviation of the historical returns.

Calculate the expected return, standard deviation, and beta for a portfolio.

Explain diversification, and distinguish between "diversifiable risk" and "nondiversifiable" risk.

Describe "beta coefficient".

Describe how beta coefficients can be estimated from historical returns.

Understand and use the CAPM (SML) to calculate required rates of return.

Explain the efficient market hypothesis (EMH) and its implications for an optimal investment strategy

 

Understand the information contained in an income statement, balance sheet, statement of retained earnings, and statement of cash flows.

Summarize the differences between debt and equity.

 

 

Financial Decisions

Recognize and calculate the relevant cash flows for a potential investment.

Calculate and interpret a net present value (NPV), an internal rate of return (IRR), and a payback period for a capital budgeting analysis.

Make capital budgeting decisions under conditions of capital rationing and mutually exclusive investments.

Explain how to account for inflation in a capital budgeting analysis.

Recognize and explain the weaknesses in the capital budgeting process.

 

Calculate and interpret a weighted average cost of capital (WACC).

Understand the effect of floatation costs on the cost of capital.

Define financial leverage, capital structure, and optimal capital structure.

Understand the effects of capital structure on the risk and return characteristics of a company's debt and equity financing.

Identify and explain factors that affect a firm's choice of capital structure:

tax benefit of debt

bankruptcy costs

other factors

 

Understand the issues involved in setting corporate policy concerning current assets and current liabilities.

Understand the cash conversion cycle and issues involved in managing the cash conversion cycle

Briefly explain the difference between permanent financing needs and seasonal financing needs.

Understand and be able to analyze the issues involved in setting credit standards and terms.

Briefly describe the sources available for short-term debt financing.

 

Identify and explain the major categories of financial ratios.

Calculate and interpret typical financial ratios.

Use financial ratios to analyze company performance.

Identify weaknesses in ratio analysis. 

Calculate and interpret pro forma financial statements using % of sales method and / or specific information.

Identify the major reasons for estimating a pro forma financial statement.

 

COURSE POLICIES

 

1. Dates and terms for class withdrawal are as outlined in the OSU Course Schedule.

 

2. OSU student ID must be displayed for all exams. 

 

3. During class lectures, please TURN OFF ALL CELL PHONES AND PAGERS.  

 

4. See Statement of Expectations for Student Conduct at http://oregonstate.edu/admin/stucon/achon.htm

 

5. Students with Disabilities: Accommodations are collaborative efforts between students, faculty and Services for Students with Disabilities (SSD).  Students with accommodations approved through SSD are responsible for contacting the instructor prior to or during the first week of the term to discuss accommodations.   Students who believe they are eligible for accommodations but who have not yet obtained approval through SSD should contact SSC immediately at 737-4098.

 

6. Students are held responsible for all announcements and instructions delivered in class.