Eastern Illinois University
Lumpkin College of Business and Applied Sciences
School of Business
BUS 3710 – Business Financial Management
Spring Semester 2005

 

Instructor:  Steve Benner

 

Office Location:  Lumpkin Hall 3106

 

Office Hours: On-Campus: 8:10 – 8:50 MWF; 2:00 – 3:30 M; and by appointment

                         Parkland College: 5:30 – 6:00 W

 

Office Phone:  (217) 581-8523

 

Website:  http://www.ux1.eiu.edu/~cfswb/

 

E-Mail:  cfswb@eiu.edu

 

Class Times:  BUS3710-815:  6:00 – 8:30 W at Parkland (Room X222)

 

Catalog Description

A practical framework for corporate financial decision-making. Topics include: acquisition, allocation, management of funds and asset valuation methods. 

 

Prerequisites

BUS 2102, ECN 2802, Junior standing

 

Teaching Method

The class will be taught as a combination of lectures and problems, including spreadsheet analysis.

 

Required Text

Essential of Corporate Finance, Ross, Westerfield, and Jordan, McGraw-Hill Irwin, 3rd Edition, 2001.

 

Recommended Materials

·        Financial Calculator (although any calculator will do for this course, I strongly encourage the use of the Texas Instruments BAII Plus calculator).

 

Course Objectives

·        Content Knowledge (♣):

1)      Understand the Time Value of Money and apply discounted cash flow techniques in problem solving.

2)      Understand Firm Value Creation. Understand the investment decision of the firm and apply quantitative capital budgeting decision rules to the investment decision of the firm.

3)      Understand the way markets work

4)      Analyze the components of the Efficient Market Hypothesis

5)      Analyze the determinants of Asset Valuation and apply quantitative valuation techniques to simple securities such as bonds and common stocks.

6)      Understand the Financing Decision of the firm and examine the determinants of the firm’s optimal capital structure.

7)      Understand and interpret ratios and perform Ratio Analysis

8)      Determine Project Cash Flows as applied to capital budgeting.

9)      Analyze the components of Risks. Apply risk and return measurement to the formation of portfolios.

10)  Understand the components of the firm’s Dividend Policy.

11)  Understand and apply the basic concepts of short-term working capital management.

 

·        Skills Development (♥):

1)      Apply problem solving methods to time value of money and asset valuation problems.

2)      Apply Critical Thinking to financial decision-making.

3)      Value Assets Quantitatively

4)      Measure Risk Quantitatively

5)      Calculate and Interpret Internal Rate of Return, Present Value and Future Value

6)      Calculate and Interpret Beta

7)      Understand how the spreadsheet can assist in financial decision-making.

 

·        Attitude/Values Development (♦):

1)      Explain The Objective of the Firm and apply financial management to achieve the objective of the firm.

2)      Understand concepts of Business Ethics

3)      Understand the Conflicting Objectives of Claimholders and the role of financial management in the resolution of these conflicts.

4)      Understand the basic concepts of corporate governance.

5)      Understand the role of firms in helping the U.S. economy grow.

 

Course Evaluation

3 Exams @ 150 points

450 points

Total Points

Grade

Homework & Quizzes

150 points

900 and above

A

3 Group Problem Sets

150 points

800 to 899

B

Group Project & Presentation

100 points

700 to 799

C

Final Exam

150 points

600 to 699

D

Total Possible

1000 points

Below 600

F

 

Course Outline

Chapter

Topic

Objectives

Time (hours)

1

Introduction to Financial Management

♣   ♦

1

2

Financial Statements, Taxes, and Cash Flow

♣

2

3

Working with Financial Statements

♣

2

4

Time Value of Money

♣   ♥

3

5

Discounted Cash Flow Valuation

♣   ♥

3

6

Interest Rates and Bond Valuation

♣   ♥   ♦

3

7

Equity Markets and Stock Valuation

♣   ♥   ♦

3

8

Net Present Value and Other Investment Criteria

♣   ♥   ♦

4

9

Making Capital Investment Decisions

♣   ♥   ♦

3

10

Lessons from Capital Market History

♣   ♥

1

11

Risk and Return

♣   ♥

4

12

Cost of Capital

♣   ♥

2

13

Leverage and Capital Structure

♣   ♦

2

14

Dividends and Dividend Policy

♣

2

15

Raising Capital

♣

1

16

Short-Term Financial Planning

♣

1

17

Working Capital Management

♣

1

--------

Exams, Presentations, Projects, Additional Topics

♣   ♥   ♦

7

 

Students with Disabilities

Appropriate academic support is available for students with a documented disability.  Please notify your professor and contact the Office of Disability Services (581-6583) for further information.

 

Emergency Preparedness Plan

Instructions about what to do in the event of an emergency are posted in all classrooms on Eastern’s campus.  Students and faculty are responsible for acquainting themselves as to the specific instructions so that they will be prepared in the event of an emergency.

 

Other Services

Career Services                                    581-2412                                                                                      

Learning Assistance Center                   581-6696

Counseling Center                                581-3413

 

Course Policies, Requirements, Etc.

  1. Late assignments will not be accepted unless prior arrangements have been made with the instructor.
  2. Make-up examinations and quizzes will be granted consistent with university policy when approved by the instructor.
  3. The Final Exam will be comprehensive; all other exams will cover only the material since the previous exam.
  4. Students are responsible for all handouts and/or articles given out during class.
  5. During the second week of the semester, you will need to form teams consisting of 3 to 4 people.  Teams will work together on the 3 group problems, various quizzes & homework, and the group project & presentation.
  6. The use of Excel® and Power Point® will be required in this course.
  7. The Group Project & Presentation will involve the financial analysis of a corporation.  More details will be provided later in the semester.
  8. Student Tutoring is a free service to all BUS 3710 Students.  The tutors are located in the Academic Advising Office (Room LMPH 2053).  I strongly recommend anyone wanting additional help to visit the tutors.  I will let you know their hours as soon as they are available.
  9. Professional Conduct is expected from all students.  This means that cell phones should be silenced and newspapers should not be read during class.
  10. Academic Dishonesty will not be tolerated and will result in an “F” for the course.

 

Tentative Schedule

The following schedule is tentative and may be changed by the instructor at any time.  All changes will be announced in class.  Students are responsible for any announced changes.

Date

Chapters

Topics Covered

Other

January

12

1, 2

Introduction, F/S, Taxes, CF

 

 

19

2, 3

Working with F/S, Taxes, CF

 

 

26

4

Time Value of Money

 

February

2

5

Discounted Cash Flow Valuation

 

 

9

6

Exam #1 (Feb 9), Bonds

 

 

16

6, 7

Bonds, Stock Valuation

 

 

23

7, 8

Stock Valuation, NPV, IRR, other

 

March

2

8

NPV, IRR, other

 

 

9

9

Exam #2 (Mar 9), Capital Invest.

 

 

16

*** SPRING BREAK  ***  SPRING BREAK ***

No Class Mar 16 

 

23

9, 10

Capital Investments & Markets

 

 

30

11

Risk & Return

 

April

6

11, 12

Risk & Return, Cost of Capital

 

 

13

13

Exam #3 (Apr 13), Leverage

 

 

20

14, 15, 16

Dividends, Raising Capital, S-T

 

 

27

17

WC, Group Presentations

 

May

Final Exam

 

May 4: Section 815 (6:00 class) Final Exam at 7:30 - 9:30