ADVANCED CORPORATE FINANCE WORKSHOP

Course Outline

• Introduction to corporate finance
  • Role and scope of corporate finance
  • Overview on operating decisions: managing current assets and current liabilities
  • Overview on investing decisions: opportunities and their benefits
    • Internal investments: replacement project, expansion projects, new products or markets
    • External investments: stocks, bonds, mergers and acquisitions
  • Overview on financing decisions: sources and their costs
    • Internal financing: preferred and common stocks
    • External financing: straight bonds, convertible bonds, sukuks, term loans and revolving lines of credit
• Working capital and the financing decision
  • • Deciding between liquidity versus profitability
    • Financing current assets: deciding between certainty and profitability
    • Working capital management styles: aggressive versus conservative
    • The cash conversion cycle
    • Cash management: accelerating collection and decelerating disbursements
• Analyzing capital investment decisions
  • • Know the 5 key principles in capital budgeting process
    • Building accurate cash flows forecasts for a correct conclusion
    • Calculating payback, NPV, discounted payback, and IRR using Excel
    • How to choose between projects with different useful lives
    • Capital rationing: allocating limited funds on available projects
    • Mistakes managers make when evaluating capital projects
• Cost of capital and the optimal capital structure
  • • The capital asset pricing model as a tool to calculate required return on equity
      • Choosing Beta: to identify project’s sensitivity
      • Applying equity risk premium: to calculate return in excess of risk free rate
    • Calculating the correct Weighted Average Cost of Capital (WACC) for a project
    • Modigliani-Miller regarding capital structure
    • Calculating the optimal capital structure
    • Why company’s actual structure fluctuates around its target capital structure
    • Factors that affect dividend policy
    • Methods of determining dividend policy:
      • Stable dividend policy: target dividend rate
      • Constant dividend rate
      • Residual dividend method
    • Effect on stock price after dividend declaration
• Financial forecasting, analysis and valuations
  • • Understanding the business: Michael Porter’s 5 elements
    • Revenue forecasting: bottom up versus top down
    • Techniques for forecasting costs and expenses
    • Approaches to balance sheet modeling
    • Methods for public equity valuation: the when and why
      • Discounted dividend valuation
        • Estimating the growth rate
      • Free cash flow valuation: free cash flow to firm and free cash flow to equity
      • Market based valuation: price and enterprise value multiples
    • Valuation conclusion used for investing decisions: invest in undervalued equities
    • Valuation conclusion used for financing decisions: issue your overvalued equities