Introduction to Business



Financial Management

Business 301 Section 301 (MTWTh, 8:00-9:15 a.m.)

SMI 453

Winter 2006

Credits: 3 Semester Hours

Prerequisite(s): Pre-Business Core (see catalog)

Instructor: James Taylor; Office: Smith 309; Phone: x2696; Email: taylorja@byui.edu

Office Hours: MTWTh 4:00-5:00, F 8:00-9:00 (other times by appointment).

Messages may be left via voice mail, or with the Business Management secretary’s office (SMI)

Required Texts: Essentials of Corporate Finance, Fourth edition, Ross Westerfield Jordan

Calculator: It is required that students have access to a calculator that handles basic business and financial functions, including time value of money calculations and cash flow analysis (IRR / NPV). The instructor strongly recommends the HP 10BII (alternatively, the HP12C). Specific instructions will only be provided in class for these calculators. (Students who choose to use any other calculator must refer to their user manuals for instructions on use.)

Course Description:

This introductory course in financial management provides a basic foundation for other courses in finance and business management. Topics covered in this course include financial statement analysis, ratio analysis, time value of money, annuities, valuing bonds, valuing stock, and how to use NPV and IRR in making investment decisions. The course also covers the cost of capital, capital structure, and personal financial items such as 401K’s, mutual funds, and IRA’s at a basic level. The instructor’s intent is to supplement textbook concepts with hands-on excel applications.

Course Objectives: Students will develop an understanding of and ability to work with fundamental financial concepts. Basic mathematics of finance and use of a business calculator and spreadsheets will be taught in the course. Students will learn real-world applications of core financial principles.

Grading:

Unit Exams (4) 300 points (75 points each)

Final Exam (Spreadsheet Application) 50 points

Quizzes 32 points (4 points each)

Spreadsheet Exercises 44 points (4 points each)

Cases 20 points (4 points each)

Other In-Class Exercises 10 points (1 point each)

Homework exercises 44 points (4 points each)

Total 500 points

Grading Scale:

93-100% -- A 73-76.99% -- C

90-92.99% -- A- 70-72.99% -- C-

87-89.99% -- B+ 67-69.99% -- D+

83-86.99% -- B 63-66.99% -- D

80-82.99% -- B- 60-62.99% -- D-

77-79.99% -- C+ 0-59.99% -- Fail

NOTES:

Study Habits: DON’T FALL BEHIND! The subject matter is quantitative and it is difficult to cram for exams or cases. In addition, the subject matter is of a cumulative nature and the concepts build from one chapter to the next. If you miss a chapter, it is unlikely that you will be able to understand or apply the information in the next chapter. Successful students tend to be those who are disciplined in their approach—this includes doing the reading and homework problems prior to class and coming to class prepared to ask questions that will assist the student in further understanding the material. This class is a fairly intensive review of financial principles, including several quantitative subjects. Students who fall behind in their reading or who do not put forth consistent effort in doing the homework assignments will likely struggle with the material. Also, we will have many “in-class” cases and homework assignments, so you will need to come to class prepared.

Exams: There will be four unit exams comprised primarily of multiple choice questions. On occasion, there may be some essay or problem questions. Exams will cover key terms and review questions from each chapter. Exams also will include key concepts covered in classroom discussions and will require the student to appropriately apply the concepts to problems. Most exams will be held in the testing center.

Final Exam: Although there will be no comprehensive multiple choice exam covering the text material, there will be an Excel final which will be somewhat comprehensive in its nature. Students will be required to solve several problems by creating Excel spreadsheets from scratch. Students will be required to work independently and will not have the use of templates or saved files. The exam will be held in one of the computer labs during the time scheduled for the class’s final exam.

Homework Exercises: Homework problems will be assigned for each of the chapters that will be covered. HOMEWORK ASSIGNMENTS ARE DUE AT THE BEGINNING OF CLASS. Homework is graded primarily on completion, and secondarily on accuracy. Students are expected to attempt every problem. If possible, homework assignments should be done using Excel. FOR HOMEWORK TO COUNT as being completed, the student MUST have attempted the problem on his or her own and the solution must be complete and the student must show all work. Some of the homework solutions will be reviewed in class; answers to most homework problems will be posted on the website after it is due so that students can review their work.

Cases: Five group case analyses will be counted in the score for the class for a total of approximately 20 points (4 points each). Cases will be completed as group projects in class. The cases will be handed out in class on the day they are to be worked on and will be handed back in at the end of class. Cases will be graded on several criteria, including proper application of concepts, correct computations, issue identification, and individual input. Group case analyses will be timed exercises.

In-Class Exercises: Some problems will be worked on in groups during the class period and turned in at the end of class. Approximately eleven of these exercises will be given, each worth 1 point.

Spreadsheet Exercises: Eleven spreadsheet exercises will be required during the semester. They are worth a total of 44 points (4 points each). While it is acceptable to work with other students in solving the excel problems, STUDENTS ARE REQUIRED TO CREATE THEIR OWN MODELS FROM SCRATCH, and not copy or use someone else’s work. The student will be required to have access to a computer with Microsoft’s Excel spreadsheet program. Computers are available in the business computer labs and the library. Further details on the exercises will be provided in class.

Class Policies:

• Attendance is important. Although attendance is not recorded, please be aware that some test material will come from in-class lectures, as well as from the text and other reading materials. In addition, case assignments and “in-class” homework assignments will be handed out and turned in during class. These assignments will not always be announced or listed on the schedule.

• If you miss class for any reason, it is your responsibility to contact a classmate or the instructor (during office hours) to determine if any assignments were made or schedules changed.

• There is no extra credit.

• Late homework assignments will be marked down by 50% and must be turned in BY THE END OF THE NEXT DAY. Please do not approach the Instructor at the end of the semester and ask if you can now turn in work that you did not complete during the course of the semester. Any assignment may be turned in early.

• If an assignment is late due to a legitimate medical emergency or family emergency, please contact the Instructor via voice mail, email, etc. and we will work out a reasonable schedule. Please turn in class work early if you plan to miss a class for personal (non-emergency) reasons.

• Grading updates on web site – If you prefer that the teacher NOT use the last four digits of your social security number to identify your work, please provide your own substitute four digit code.

• Please turn off cell phones before the start of class

• No food is allowed in class.

• Do not surf the web during class.

• While students are encouraged to study in groups, assignments are to be produced independently.

• Code of Honor and Grooming standards will be observed in the classroom and in the testing center.

• IN COMPLIANCE WITH APPLICABLE DISABILITY LAW, QUALIFIED STUDENTS WITH A DISABILITY MAY BE ENTITLED TO “REASONABLE ACCOMMODATION.” IT IS THE STUDENT’S RESPONSIBILITY TO DISCLOSE TO APPROPRIATE PERSONNEL IN THE SSD OFFICE ANY SPECIAL NEED HE OR SHE MAY HAVE AND TO PROVIDE THE APPROPRIATE DOCUMENTATION OF THE DISABILITY. THE SSD OFFICE IS LOCATED INSIDE THE LEARNING ASSISTANCE CENTER, MCKAY LIBRARY 1ST FLOOR.

Class Schedule: The following represents a tentative schedule for this class. The instructor reserves the right to make changes, deletions, corrections, or additions during the course. You will be given notice in advance of any changes. Assignments are from required text, unless otherwise noted. Key: P=Problems at end of each chapter; CT=Critical Thinking and Concepts Review questions at the end of each chapter; WW=What’s on the Web questions at end of each chapter. ** Instructor will provide copies of cases for in-class use

|Date |Discussion Topic |Reading Assignment |Assignment(s) due today: |Special Notes: |

|January |

|9 Mon |Introduction—Course Review | | | |

|10 Tues |Financial Mgt |Ch.1 (1.1-1.6) | | |

|11 Wed |Financial Statements (B/S, I/S) |Ch. 2 (2.1-2.2) |CT: 1.1-1.14 WW: 1.1, 1.2, 1.3 | |

|12 Thur |Financial Statements (T, CFlow) |Ch 2 (2.3-2.4) | | |

|16 Mon |NO CLASS - Holiday |NO CLASS |NO CLASS | |

|17 Tues |Ratio Analysis |Ch. 3 (3.1-3.4) |CT: 2.2, 2.3, 2.7 P(ch2): 2, 3, 4, | |

| | | |6*, 10*, 12, 19*, 21 WW: 2.2 | |

|18 Wed |Ratio Analysis |Ch. 3 (3.5) |Excel #1 (I/S and B/S) | |

|19 Thur |Using Financial Statements | |CT: 3.1, 3.3, 3.4, 3.6, 3.8 |**Case (Ratio Analysis) |

| | | |P(ch3): 14*, 15*, 34, 35, 36, 37 |EXAM 1 Chap 1,2,3 |

| | | |WW: 3.2 |Open 1/19 Close 1/20 |

|23 Mon |Time Value of Money (PV,FV) |Ch. 4 (4.1-4.3) |Excel #2 (Ratios) | |

|24 Tues |Time Value of Money (I,N,.xls) | |Excel #3 (PV, FV) | |

|25 Wed |Annuities (FVa, PVa) |Ch. 5 (5.1-5.2) |CT: 4.2, 4.3, 4.4 | |

| | | |P(ch4): 2, 3*, 4*, 5, 6, 15*, 17, 21,| |

| | | |22, 23, 24, 25 | |

|26 Thur |Amortization/Compounding.xls) |Ch. 5 (5.3-5.4) |Excel #4(PVaFVa) | |

|30 Mon |Time Value of Money / Discounting | |CT: 5.2, 5.3, 5.5, 5.6, 5.7 |**Case (Time Value of Money) |

| | | |P(ch5): 2, 3*, 4*, 5, 7, 8, 9, 10, | |

| | | |11, 12, 13, 14, 15 | |

|31 Tues |Personal Financial Management |Handout |Excel #5 (Retirement) |**Case (Add’l TVM Case) |

|February | | | | |

|1 Wed |Personal Financial Management |Handout |Excel #6 (Loan Amortization) |Exam 2 Chap 4 & 5 |

| | | | |Open 2/1 Close 2/2 |

|2 Thur |Interest Rates & Bond Valuation |Ch. 6 (6.1-6.4) | | |

|6 Mon |Interest Rates & Bond Valuation |Ch. 6 (6.5-6.7) |Excel #7 (Bond Price & Yield) | |

|7 Tues |Stock Valuation |Ch. 7 (7.1-7.2) |CT: 6.1, 6.2, 6.10, 6.12 | |

| | | |P(ch6): 1, 2, 3*, 4*, 5, 6, 14, 15* | |

|8 Wed |Stock Valuation / Equity Markets |Ch. 7 (7.3) |Excel #8 (Stock Prices) | |

|9 Thur |Capital Budgeting |Ch. 8 (8.1-8.3) |CT: 7.1, 7.2, 7.3, 7.4 P(ch7): 1, 2, | |

| | | |3, 4, 11, 12, 21, 22, 23 | |

|13 Mon |Capital Budgeting |Ch. 8 (8.4-8.6) |CT: 8.3, 8.4, 8.5, 8.6, 8.10, 8.11 |Exam 3 Chap 6,7,8 |

| | | |P(ch8): 1, 2, 4, 5, 6, 7, 8, 9, 10 |Open 2/13 Close 2/14 |

|14 Tues |Project Cash Flows |Ch. 9 (9.1-9.7) | | |

|15 Wed |Project Cash Flows | |Depreciation Schedule & ATSV | |

|16 Thur |Project Cash Flows | |Excel #9 (CapBgt) | |

|20 Mon |HOLIDAY – NO CLASS |NO CLASS | | |

|21 Tues |Project Cash Flows | |CT: 9.1, 9.2, 9.5, 9.6 |**Case (Capital Budgeting) |

| | | |P(ch9): 1, 2, 4, 9, 10, 11, 13 | |

|22 Wed |Cost of Capital |Ch. 12 (12.1-12.5) | | |

|23 Thur |Cost of Capital | |Excel #10 (WACC) | |

| | | |CT: 12.1, 12.4, 12.10 P(ch12): 1, 2, | |

| | | |3, 5, 6, 7, 9, 10, 19, 20 | |

|27 Mon |Financial Leverage |Ch. 13 (13.1-13.8) | | |

|28 Tues |Financial Leverage | |CT: 13.1, 13.3, 13.5 |**Case (Cost of Capital) |

| | | |P(ch13): 1*, 4, 6 | |

|March | | | | |

|1 Wed |Review | |Excel #11 (Amort.) |Exam 4 Chap. 9, 12, 13 |

| | | | |Open 3/1 Close 3/5 |

|2 Thur |Excel Final | |Excel Final |8:00 to 9:15 a.m. |

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