During MGT 769 Financial Decisions, you’ll develop essential skills to make appropriate financial decisions for your firm. Focus is on the ability to identify financial issues that offer opportunity, as well as recognize potential threats. You’ll gain the capacity to utilize financial business knowledge in an ethical manner when making these decisions.
The hands-on approach provides the necessary insight into the role of financial issues in the strategic aspects of firm management. Further demonstration of the acquisition of the required abilities occurs through analysis and preparation of case studies, essays, and self-study regarding firms facing significant challenges.
Coursework is designed for problem identification and solution creation. Here are examples of some assignments you may complete as part of MGT 769 Financial Decisions.
- Describe and critique Target's capital-budgeting system case study. Give specific consideration to the role of the real-estate managers and the makeup of the CEC.
- Review a Krispy Kreme case study and answer questions about the income statement, balance sheet, discrepancies, and management discretion.
- Complete a final project where you analyze a case study, identify crucial financial issues, and attempt to provide coverage, explanation, and a proposed course of action-all related to the underlying financial concepts.
Each week of this course focuses on a different theme. Your group discussions and coursework will align with the week’s theme as well as its primary objectives. All weekly course material is proposed and subject to change.
Week 1 – Thinking Like an Investor
During the introduction week, you’ll learn to think like an investor, and become familiar with market efficiency, value creation, and economic profit . You’ll be able to:
- Analyze finance scenarios considering the principles of Warren Buffet’s philosophy.
- Evaluate current financial business decisions using the three principles of Warren Buffet.
- Assess the value of a fund/business using known and unknown value additive elements.
- Examine issues of asset control, current role of management, and outsider influence.
Week 2 – Cost of Capital
In week two, you’ll focus on estimating the cost of capitals an introduction to the calculation of the weighted-average cost of capital (WACC) of the firm. You’ll be able to:
- Evaluate evidence on how sophisticated companies and financial advisers estimate capital costs.
- Assess the importance of estimating a firm's cost of capital and what it represents.
- Extend risk-return (i.e. mean-variance) analysis to corporate finance.
- Examine the assumptions and limitations of risk-adjusted hurdle rates.
- Estimate a weighted-average cost of capital and cost of equity.
Week 3 – Capital Budgeting and Resource Allocation
Throughout week three, you’ll critically examine the principal capital-budgeting criteria, as well as assess cash flows, cost of capital, and net present value of a capital-investment decision. You’ll be able to:
- Examine the principal capital-budgeting criteria process to determine investment worthiness.
- Assess cash flows, cost of capital, and net present value of a capital-investment decision.
- Explain how sensitivity analysis affects a capital-investment decision and key drivers.
- Evaluate the impact of qualitative factors and real option value of follow-on investment decisions.
- Explore a wide range of capital budgeting issues as a means of determining major capital or investment and expenditures.
Week 4 – Financial Analysis and Forecasting
During the fourth week, you’ll be introduced to percentage-of-sales forecasting, how to speak plainly about one's financial forecast, and the useful insights for the general manager. You’ll be able to:
- Explain percentage-of-sales forecasting and preparation of a simplified forecast.
- Explore financial-statement and financial-ratio analysis in order to note trends in a business.
- Provide an exercise in financial statement analysis for strategy and performance insights.
- Illustrate how economics of individual industries account for significant variations in financial ratios.
- Point out differences in technologies, product characteristics, or competitive structures.
- Analyze financial performance based on managerial choices, strategy, operations, and finance.
Week 5 – Management of the Corporate Capital Structure
As you progress to week five, you’ll profile highly-leveraged acquisitions and their financial structure, specifically valuing a business and credit analysis. You’ll be able to:
- Know the conceptual foundations of firm valuation, and the three classic valuing approaches.
- Explain the Modigliani-Miller capital structure irrelevance propositions and debt tax shields.
- Explore the financial effects of the capital structure change and the trade-offs.
- Evaluate and explain the valuing of a business, including a complete financial forecast.
- Discuss and explain the value of credit analysis looking at a variety of factors.
Week 6 – Analysis of Financing Tactics: Leases, Options, and Foreign Currency
In week six, you’ll examine many new topics of international finance such as interest-rate parity, currency risk management, and the Eurobond market. You’ll be able to:
- Explain interest-rate parity, currency risk management, and the Eurobond market.
- Know why forward-currency exchange rates vary from spot rates.
- Evaluate the magnitude and effect of exchange-rate risks.
- Perform exchange-rate risk management.
- Discuss the pros and cons of issuing convertible debt via straight debt or equity.
- Examine how lease financing "sells" the depreciation-tax shield of an asset.
Week 7 – Valuing the Enterprise: Acquisitions and Buyouts
Throughout this week, you’ll learn to survey the many conceptual and practical challenges associated with estimating the terminal value for a firm. You’ll learn to:
- Examine the challenges associated with estimating the terminal value for a firm.
- Practice the many skills for valuation which enhance the negotiation of an acquisition.
- Learn to value the costs and benefits of a deal to gauge attractiveness for shareholders.
- Understand valuing using discounted cash flow and market multiple valuation of TeamSystem.
Week 8 – Ethics in Finance
During the final week, you’ll attempt to answer questions of ethics and integrity. How do you obtain integrity? Do you learn it or do you inherit it? To whom does the concern for financial ethics belong? The individual or the corporation? You’ll learn to:
- Know the five positive arguments for bringing ethics to bear on financial decision-making.
- Assess the two classic schools of thought for whom one acts: stockholders or stakeholders?
- Choose among alternatives based on right vs. wrong and sometimes more right or less wrong.
- Define the arguments for right and wrong based on consequences, duty or intentions, and virtues.
- Evaluate the two objections of virtue-based ethics.
- Apply the steps to promote ethical behavior in one's firm.