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
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- 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
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- 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
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- 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
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- 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
