BA 360 – Introduction to Financial Management
36057
Spring 2008
Instructor: Steven Gallaher Class: MW 2-3:20
Phone: 737-6049 Room: GILB 224
Email: steven.gallaher@bus.oregonstate.edu TA: Sophie Ma, Scott Morgan, Brooke Pollack
Office: BEXL 422A
Office Hours: MW 12-1:45 and by appt.
Website: http://classes.bus.oregonstate.edu/ba360/
Required Text:
Brooks, Financial Management: A Modern Approach, Pearson Custom
Publishing, 2007, Second Preliminary Edition.
Calculator:
Highly recommend purchasing a TI BAII Plus
or Plus Professional Financial Calculator (cost around $28 to $45). You will certainly need a financial
calculator of some kind; certain test questions will be unanswerable otherwise.
Course
Objective: The objective
of the course is to introduce students to the basic questions facing a
financial manager and the tools a financial manager uses to find answers to
these questions. The course will introduce the basic tools of financial and
applications of financial theory in use today. Students will be introduced to
legal, ethical, technological, and global issues facing a financial manager.
The course is designed to enhance a student’s approach to financial
decision-making and emphasizes technical analysis and quantitative approaches
to decision making.
Grading:
Students take three examinations during the course. Each examination will be a
series of multiple choice questions, essay questions, and/or problems. Weekly
homework assignments will be collected in class and evaluated for effort. At
the Friday recitation sessions homework will be returned and solutions
provided. Exams will be worth 100 points each for a total of 300 points.
Homework and recitation attendance will be worth 160 points, 80 for turning in
homework and 80 for attending recitation. An additional 40 points for attending
recitation on examination return days for a class total of 500 points. Baring extraordinary circumstances, there
will not be a curve in this class. 465
points will be an A while 464 will be an A-; 400 points will be a B-, while 399
will be a C+. (Should the extraordinary
happen, 400 points will still be a B- or better.)
OSU and I have strict standards for grading. There will be no “grade-inflation” in this course. Your grade in this course will be determined exclusively by your performance on the material in this course as set out in the above section. Extra work to improve your grade is not available. Other things which will not (directly) affect your grade include your performance in past courses, the quality of your contributions in class, or the amount of time you spend in my office. (Of course, some of these things may indirectly affect your grade a great deal.)
Academic
Dishonesty:
For expectations of student conduct see: http://oregonstate.edu/admin/stucon/achon.htm
Class
Attendance: I expect students
to be on time and present for every class. Good study habits and efficient
management of time will translate into good work habits and responsible
employees and effective managers. If you cannot make an exam you need to notify
me prior to the exam. Please leave a message on my telephone answering service
or send me an e-mail message.
(1) ECON 201: Introduction to Microeconomics
(2)
BA 213 Managerial Accounting or BA215 Money & Investment
Management
(3)
Junior Standing
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 to
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.
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.
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 faculty member in charge of the course 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 SSD immediately at 737-4098.
Course Outline
This is a provisional schedule. I plan to go through the text at the pace of approximately one chapter per day. However, it is entirely possible that we will get slightly ahead or behind as the quarter progresses. In any case, exam dates will not change except in extreme circumstances. (Generally, this means University closure.)
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Homework due |
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Meet and room assignment |
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1:2,6,8,10 |
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2: 6,8,9,10,16,19,22 |
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Chapter 1-2 |
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3: 3,4,5,6,9,15,20 |
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Review |
4: 3,6,12,17,18 |
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Chapter 3-4, review |
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EXAM 1 |
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Exam 1 return |
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5: 1,2,6,9,10,12,16 |
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6: 2,4,6,8,10,11,14 |
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Chapter 5-6 |
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Chapter 7 |
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7: 1,3,6,20,23,24,28,30,32 |
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Chapter 7-8 |
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8: 6,8,10,12,16,20 |
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Review |
9: 3,12,13,16,18,19,20 |
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Chapter 9, review |
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EXAM 2 |
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Exam 2 return |
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NO CLASS |
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Chapter
11 & 12 |
10: 2,4,7,9,14 (mkt only), 17 |
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Chapter 10 |
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11: 13,15,17,19; 12:8,9,10,12 |
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Review |
13: 8,10,11,18,20 |
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Chapter 11-13, review |
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Final, |
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