Mark Alan Bronstein



FINANCIAL MANAGEMENT IInstructor:Professor Julia PlottsMobile:(310) 528-6291Email:plotts@marshall.usc.edu Textbook:Analysis for Financial Management, Robert C. Higgins, McGraw Hill, 10th editionIntroduction:Principles and practices of modern financial management; analysis of financial performance; valuation of investments; elements of financial decisions. The MMM finance sessions will focus on value creation – building shareholder value inside and outside of the organization.Learning Objectives:The finance curriculum introduces the theory and practice of corporate finance. The theory of finance helps us to understand why organizations and financial markets behave the way they do. We will also discuss best practices for using financial analysis for long-term strategic planning, sustainability and growth. Our coverage of financial management is designed to allow you to become comfortable with the fundamentals so that you can improve your proficiency in participating in financial and strategic discussions within your organization. Specifically, the course objectives are:To give you the capacity to understand the theory and apply the techniques developed in corporate finance. If it cannot be applied, who cares?To develop your analytical skills and communication strategies for discussing the merits and possible risks of strategic investments.Financial Management I: July 13FM II: Online sessionPre-Work:Higgins text: read Chapters 1-2, skim Chapters 3-4Learning Objectives:To develop an understanding of basic ways to ‘slicing’ financial statement information to enhance decision–making and/or analysis. Revisit the statement of cash flows from a decision-making point of view.Understand how decision-making rests on after-tax cash flows [rather than other metrics]. Interpret and analyze financial statements, ratios and market value measures.Understand how to utilize a DuPont ROE approach in corporate and strategic analysis.Understand the determinants of growth.Higgins text: read Chapter 7 (pages 248-274), Chapter 8 (pages 302-305 about investment risk and cost of capital), skim Chapter 9 (pages 349-369)Learning Objectives:Understand how to compute present value and the net present value of any set of cash flows.To understand discounted cash flow techniques for enhanced valuation applications.Introduce the concept of capital budgeting, the decision making process for accepting or rejecting projects. Define NPV, payback period, IRR.Briefly discuss risk analysis in investment decisions and the cost of capital.To be able to discuss the essential components of the basic capital budgeting approaches. To be able to express the strengths and weaknesses among the basic capital budgeting approaches.Discuss why capital budgeting decisions are one of the most important financial decisions made by management.FINANCIAL MANAGEMENT IIINovember 11, 2015Instructor:Julia PlottsMobile:(310) 528-6291Email:plotts@marshall.usc.edu Textbook:Analysis for Financial Management, Robert C. Higgins, McGraw Hill, 10th editionCase: Erie Hospital David W. Young, Jan 24, 2014 HBS Product #: TCG155-PDF-ENGBrief Review of Financial Management II, Q&AHiggins text: review Chapter 7 (pages 248-274)We will review the Erie Hospital case to ensure an understanding of the concepts introduced during the online session for Financial Management II. This is a relatively simple case, in which several present value calculations are required to provide practice in the technique. The case also deals with the questions of sunk costs, the weighted average cost of capital (WACC), and the appropriate interest rate to use for donated funds. Ideally you will attempt the calculations and answer the questions in the case prior to our class session.Learning Objectives:Review best practices for capital budgeting, the decision making process for accepting or rejecting projects including net present value (NPV), payback period and internal rate of return (IRR).Discuss risk analysis in investment decisions and the Weighted Average Cost of Capital (WACC).Pre-Work for Financial Management III:Risk Analysis in Investment Decisions – Determining the Cost of Capital/Quantifying RiskHiggins text: read Chapter 8 up to page 320Business is risky. You might not get paid by a customer, you might default on a bank loan, your company might get sued, etc. Risk typically is defined in terms of probabilities of certain outcomes. We will discuss the risk/reward relationship and methods to quantify risk.Learning Objectives:Consider the risk and return tradeoff and its implications to corporate finance and the opportunity cost of capital for companies and organizations.Understand that cost of capital or Weighted Average Cost of Capital (WACC) is a risk-adjusted discount rate applied for time value of money calculations such as NPV analysis or firm valuation.Building upon the knowledge gained from Professor Porter’s statistics sessions, we can utilize statistical concepts such as regression analysis to help us understand financial risk.Understand the concept of diversification and how it relates to the definition of risk in finance. Total risk = systematic risk + unsystematic risk.Discuss how companies adjust their hurdle rates for differing investment risks.Business Valuation – Applying Time Value of Money to Valuing FirmsHiggins text: read Chapter 9Regulatory and legislative changes in healthcare have resulted in consolidation in the industry, making this topic extremely relevant. It will be applied in the March financial strategy sessions during the discussion regarding mergers and acquisitions. Our coverage of valuation has been designed to allow you to become comfortable with the language of finance and fundamentals so that you can improve your proficiency in participating in financial and strategic discussions within your organization and with external analysts and service providers. There are many approaches to determine the value of an asset or firm. We will discuss discounted cash flow (DCF) and the market multiples approach (comps).Learning Objectives:Discuss the steps in a DCF analysis: 1) forecast free cash flow; 2) estimate terminal value; 3) estimate WACC or a risk-adjusted discount rate; 4) consider sensitivity analysisDiscuss the steps in a comps analysis: 1) select the universe of comparable companies; 2) benchmark the comparable companies – this involves an analysis of financial information, ratios, and valuation multiples; 3) determine valuationDetermine which valuation technique is most relevant to your company given its stage in the business lifecycle, industry, etc.Explore the challenges of valuing high-growth and private companies. ................
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