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2019/2020  BA-BHAAI1079U  Financial Management

English Title
Financial Management

Course information
Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration Summer
Start time of the course Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 120
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Course instructor: Gregory Perelman, Lecturer, Graduate School of Management, University of California, Davis.
    Sven Bislev - Department of Management, Society and Communication (MSC)
For academic questions related to the course, please contact instructor Gregory Perelman at gperelman@ucdavis.edu
Other academic questions: contact academic director Sven Bislev at sb.msc@cbs.dk
Main academic disciplines
  • Finance
Teaching methods
  • Face-to-face teaching
Last updated on 27/11/2019

Relevant links
Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors:
  • Apply financial formulas to address time value of money questions;
  • Determine the cost of debt and cost of equity by calculating appropriate inputs;
  • Build proforma finance statements for a proposed project, determine free cash flows and apply capital budgeting rules (NPV, IRR, payback) to make appropriate investment decision;
  • Analyze company's financial statements to determine free cash flows and apply fundamental (discounted cash flow) valuation framework to calculate company's value;
  • Calculate company's value by applying relative valuation framework;
  • Demonstrate understanding of the following topics: efficient markets, principal/agency theory, dividend and stock repurchase policies;
Course prerequisites
Introductory course in accounting required
Examination
Financial Management:
Exam ECTS 7.5
Examination form Written sit-in exam on CBS' computers
Individual or group exam Individual exam
Assignment type Written assignment
Duration 4 hours
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Summer, Ordinary exam: 4 hour written exam in the period of 27–31 July 2020
Retake exam: 4 hour written exams in the period of 28 September–2 October 2020
3rd attempt (2nd retake) exam: 72-hour home assignment- 23-26 November 2020 – for all ISUP courses simultaneously

Exam schedules available on https:/​/​www.cbs.dk/​uddannelse/​international-summer-university-programme-isup/​courses-and-exams
Aids Open book: all written and electronic aids, including internet access
Read more here about which exam aids the students are allowed to bring and will be given access to : Exam aids and IT application package
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Exam form for 3rd attempt (2nd retake): 72-hour home project assignment, max. 10 pages.
Course content, structure and pedagogical approach

This course is an introduction to business finance and serves as a basic finance course useful in all business programs; the list of topics covered in the course include, but are not limited to: the basic mathematics of finance (time value of money), interest rates and risk and return (CAPM), estimation of appropriate cost of capital, valuation of stocks and bonds, capital budgeting and valuation of projects and companies, optimal capital structure, efficient markets;  note: as multiple numerical examples will be demonstrated/discussed, you will be expected to have an in-class access to laptop/tablet with Excel (preferred) or to financial calculator/app;

 

Preliminary assignment: An exercise will be provided to review financial statements (income statement, balance sheet,  and statement of cash flows); solutions will be posted and reviewed in the first meeting;
 
Class 1: Introduction and review of financial statements;
Class 2: Time value of money: basic mathematics of finance;
Class 3: Interest rates and valuation of bonds;
Class 4: Capital budgeting: project valuation rules (NPV, IRR, payback);
Class 5: Portfolio theory and capital asset pricing model (CAPM);
Class 6: Risk and return: cost of capital; Case 1: Acid Rain: The Southern Company;
 
Feedback activity: sample midterm exam will be posted covering the first half of the course; solutions will be provided and discussed in class;
 
Class 7: Midterm review; Optimal capital structure: MM proposition;
Class 8: Company valuation framework: fundamental (discounted cash flow) and relative approaches;
Class 9: Compensating shareholders: dividends and stock repurchase policies;
Class 10: Financial topics review: efficient markets, principal/agency theory, bankruptcy, option pricing; Case2 : H.J. Heinz;
Class 11: Course review; in-class company valuation;
Description of the teaching methods
All teaching takes place on campus (notice that face-to-face teaching may include the use of online materials and tools)
Feedback during the teaching period
Sample midterm exam will be posted covering the first half of the course; solutions will be provided and discussed in Class 6; the midterm will be in the same format as the final exam in this course;
Student workload
Preliminary assignment 20 hours
Classroom attendance 33 hours
Preparation 126 hours
Feedback activity 7 hours
Examination 20 hours
Further Information

Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 1 in order to 'jump-start' the learning process.

 

Course timetable is available on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams

 

We reserve the right to cancel the course if we do not get enough applications. This will be communicated on https://www.cbs.dk/uddannelse/international-summer-university-programme-isup/courses-and-exams end March 2020.
Expected literature

Mandatory readings:

 

Required reading materials to be purchases from HBS Publishing at this link: https:/​/​hbsp.harvard.edu/​import/​672240
Notes:
1. Business Valuation: Standard Approaches and Applications, UV6586; rev. Nov. 21, 2013
2. Corporate Valuation and Market Multiples, #9-206-039, Rev. January 16, 2009
3. The Cost of Capital: Principles and Practice, #UV6793, Rev. Nov. 13, 2015
Cases:
1. Acid Rain: The Southern Company (A). #9-792-060, Rev. April 28, 1993
2. H.J. Heinz: Estimating the cost of capital in uncertain times. #UVA-F-1634, Nov. 8, 2010


Other required reading:
Lecture Notes: will be posted on Canvas;
Review exercises and solutions: will be posted on Canvas; 
 

 

Additional relevant readings:

 

Recommended textbook for background reading:
Fundamentals of Financial Management, Concise Edition, by Eugene F Brigham and Joel F. Houston; (any edition is acceptable); Cengage Learning;

 
Last updated on 27/11/2019