Course Number and Title: Finance 504 – Financial Management

Catalog Description: Devoted to a study of the concepts, processes, and institutions in financing business firms. Prerequisites: ACC 501, CSC 503, ECO 502 or equivalent.

Learning Objectives: On successful completion of this course, a student should be able to:

· Identify the goal of financial management, tell why it is superior to other possible goals and relate this goal to the social responsibility of the firm.

· Analyze the financial statements of a firm, draw conclusions from this analysis and describe the regulation of financial statement content.

· Explain financial forecasting methods and prepare, at a minimum, a financial forecast using the constant ratio method.

· Describe the financial environment including markets, institutions, interest rates, yield curves and the regulation of financial markets. A student should also be able to explain the ethical and legal issues involved in the markets, especially those involving insider trading.

· Perform computations involving the time value of money including future value, present value, annuities, and interest rates.

· Explain the relationship between risk and rates of return on financial assets held individually and in a portfolio; explain the concepts and application of the capital asset pricing model.

· Compare the valuation models for securities and be able to calculate the value and rate of return on the various types of securities issued by a corporation.

· Evaluate capital budgeting projects using internal rate of return, net present value, profitability index, and terminal value methods. Describe how to handle riskiness of projects in capital budgeting.

· Calculate the cost of capital, including the component costs and the overall (weighted-average) cost of capital for a firm. Describe the concept and use of marginal cost of capital.

· Evaluate the financial structure of a firm including the sources of funds that a firm might use and describe the relationship between business risk and financial risk.

· Describe the theories of how dividend policy affects stock value and the mechanics and determinants of dividend payments.

Specific Topics:

Required:

An overview of managerial finance including the goal of management and social and ethical issues

Analysis of financial statements

The financial environment including markets, institutions, interest rates and taxes

Risk and rates of return

Time value of money

Bond and stock valuation models

Financial forecasting, budgeting and control

Capital budgeting models including project cash flows and risk evaluation

Measurement of cost of capital including the impact of the capital structure and financial leverage

Dividend policy

Multinational financial management

Current Textbook: Eugene F. Brigham and Michael C. Ehrhardt, Financial Management, Tenth Edition, Harcourt College Publishers, 2002

Evaluation: Course grades will be evaluated based on the following weights.

Three examinations ................................……............ 75%
Written assignments…………………….................... 25%

The three major exams will consist of problems and short essay questions. Each of the three exams will count equally. The final exam is comprehensive.

Written assignments consist primarily of problems which will be assigned throughout the semester as homework. Problems will generally be due on the Friday following the class meeting at which they are assigned. Problems may be submitted in the body of an email or as a Word attachment to email. Short cases and quizzes may also be given. We will drop the grade on your lowest homework paper or quiz.

Curriculum Coordinator: Dr. Reynolds Griffith