GSBA 548: Corporate Finance



FBE 437: Fundamentals of Entrepreneurial Finance

4 UNITS CREDIT

Lecture 4:00 p.m. to 5:50 p.m. M & W Room: JKP 102

52 of 52 Registered as of 8/22/14 (No UG waitlist kept)

Instructor: Prof. Duke K. Bristow, Ph.D.

USC Office ACC 301C Telephone: (213) 740-6513, USC Fax: (213) 740-6650

Email: dbristow@usc.edu

Course website: on Blackboard ()

Office hours: 3 to 4 p.m. M W and by appointment*

*E-mail is a dependable and efficient way to communicate with me.

Catalogue Description:

Fundamentals of internal financial management of developing firms: Cash flow analysis; capital budgeting; sources of financing; risk analysis; measurement of profits; and mergers and acquisitions. PREREQUISITE: BUAD 215x, BUAD 306 or equivalent.

Course Description:

This course is primarily designed to introduce undergraduate seniors with high class standing – and exceptional non-business majors to fundamentals of real world finance in businesses that are not too big to fail. This is corporate finance without the simplifying assumptions. In this course, we deal with high asymmetric information, inefficient capital markets with significant frictions. In this class, institutional details and regulations matter in decision making. Further, managers are not hired by atomistic arm’s length shareholders who hold large well-diversified portfolios. In this course, the manger is the owner, often the founder, who has a large non-diversifiable and often illiquid position in this firm, lasting decades, not seconds. Here we deal with the fundamentals of the entrepreneur’s financing and growth problems, risks and rewards. This is finance in the real world.

Required Course Materials:

Text: Fundamentals of Entrepreneurial Finance by Stancill ISBN 9780985897666

Mary Ploch Editor 2012 Edition

▪ Additional Reading: The Wall Street Journal, ISBN 9781427527011 in bookstore packet with special student pricing (also available through Factiva in the Crocker Business Library) is required reading. Slides, handouts and supplemental readings and articles will be posted on Blackboard. Read at least page one every day, Mon to Fri.

▪ Note: You may not record any portion of any class without my prior written permission.

Grading Criteria:

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Grade distributions will be provided after each examination. Your final grade is based on your total score and is subject to the Marshall curve. If you don’t want to be on a curve drop this class.

Projects/Attendance/Class Participation Grade: 20 points

You will be writing a financing plan for a firm of your choice (and my agreement) over the whole semester as a project. This will be broken down into smaller class assignments and then combined into a full plan by the end of the semester. This project may help you get a job or help you secure financing for a growing business. You must meet the deadlines to receive full credit.

In order to receive full credit for the class participation portion of your grade you must miss no more than 3 lectures and exhibit good participation in class as well as participation on Blackboard discussions. No one may sign you in except yourself; signing others in is cheating and will not be tolerated. The class is taught as a discussion with the students being active participants. If you don’t plan to come prepared please drop the course. Posting thoughtful questions and answers on Blackboard counts toward class participation. You should post your short bio and a resume on Blackboard by the end of the second week of classes. Participation includes pop quizzes.

Readings:

You are responsible for preparation for class participation and examinations:

1. Reading the assigned topics as outlined in the lecture schedule, from chapters in the required textbook. Read one week ahead of the lecture.

2. Reading the Wall Street Journal on a daily basis in preparation for class discussion.

First and Second Examinations: 80 points

First Exam: Oct 7th - Chapters 1 through 8: 40%

Second Exam: Dec 4th - Chapters 1 – 17: 40%

The midterm is worth 40% of your grade and the final exam is worth 40% of your course grade. Class participation often makes the difference of one whole letter grade. Exam questions will include both qualitative and quantitative questions from material covered in class, and presented in the readings (textbook, articles posted, Wall Street Journal) including current events relevant to this class. Questions may be in multiple-choice, short answer and numerical-problem format. There will be no make-up exams offered. If you miss an exam, you get a zero or the next one counts for the one you missed, depending upon the verified reason for the absence. Knowing where and when the exams are scheduled is your full responsibility.

Exam Policies:

• If you have pre-arranged trips on the day of exams, please drop the course. There will be no make-up quizzes or exams.

• All exams are closed-book and closed-notes. No talking or texting during an exam.

• You are required to follow all instructions given on the cover sheet of each test. Failure to do so will reduce your score.

• It is your responsibility to check your quiz or exam to ensure that no pages are omitted. If your test is missing a page, ask the proctor for a new test. Requests for re-grades because pages are claimed to have been missing from a test will not be honored.

• Laptops, PDAs and wireless handhelds and cell phones may not be used in any quiz or exam. You should bring a financial calculator to perform calculations.

• If you change your answer on the scantron sheet, it is your responsibility to properly erase other answers you had previously selected. Scantrons that are misgraded because of poor erasure marks will not be re-graded.

Authorized Absences:

Students who will be absent from a scheduled class meeting or examination because of an official University activity may be granted an official excuse in advance of the events by the dean or department chair. It is the responsibility of the activity sponsor to provide lists of eligible students in time for the administrator to give approval.

Student Disability:

Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure the letter is delivered to me by the second weeks of the semester. DSP is located 3601 Watt Way – Grace Ford Salvatori Hall, Room 120. Their phone number is (213) 740-0776. Video phone is (213) 814-4618 and fax is (213) 740-8216. Their email is ability@usc.edu . DSP is open 8:30 a.m. to 5:00 p.m., M-F.

Code of Ethics & Academic Integrity:

The use of unauthorized material, communication with others during an examination, attempting to benefit from the work of another student, signing another on to the sign-in sheet, all that defeats the intent of an examination or other class work is unacceptable to the University. It is often difficult to distinguish between a culpable act and inadvertent behavior resulting from the nervous tensions accompanying examinations. Where a clear violation has occurred, the student’s work will be disqualified as unacceptable and a failing mark will be assigned.

All students at the University of Southern California have an inherent responsibility to uphold the principles of academic integrity and to support each other and the faculty in maintaining a classroom atmosphere that is conducive to orderly and honest conduct. Students must understand and uphold the rules printed in the Student Conduct Code in the USC SCampus handbook, regarding examination behavior, fabrication, plagiarism, and other types of academic dishonesty.

Unclaimed Paperwork:

Unclaimed work by a student will be discarded after four weeks.

Scheduling Appointments:

Please come to my office hours as listed on page 1. If you have classes or work scheduled during my office hours and you wish to meet with me, please send 3 of your available times on Tuesday, Thursday and Friday mornings and we will find a match of your calendar and mine. I am very available to meet with students. Some say I am a one of their most available and interested professors. If it is a matter involving a career decision, business venture or other non-class related matter please mention that in your email such that I can prepare to be of greatest assistance when we do meet.

Acknowledgements:

I thank Prof. Stancill and Mary Ploch for use of their materials and Mindy Tjang my RA and Helen Pitts, Deborah Jacobs and Terry Lichvar and the FBE staff for their assistance.

UNIVERSITY OF SOUTHERN CALIFORNIA

MARSHALL SCHOOL OF BUSINESS

FBE 437 Duke K. Bristow, Ph.D.

Fall 2015 ACC 301c 10-11 a.m. MW

Phone (213) 740-6513 email: dbristow@usc.edu

| | | |

|Date |Topic(s) |Text Reading(s) |

|Week 1 | | |

|Aug 24 |Course Overview, Syllabus | |

|Aug 26 |New Venture Fundamentals |Chapter 1 |

|Week 2 | |

|Sep 1 |Elements in Financing Plans |Chapter 2 |

|Sep 3 |What do Financial Statements Tell Us? |Chapter 3 |

| |Student Bios due & Resume optional | |

|Week 3 | |

|Sep 7 |Labor Day – no school | |

|Sep 10 |What do Financial Statements Tell Us? (cont.) |Chapter 3 |

| | | |

|Week 4 | |

|Sep 14 |Fundamentals of Cash Flows |Chapter 4 |

| |PPM Executive Summary Due | |

|Sep 16 |Fundamentals of Cash Flows (cont.) |Chapter 4 |

| | | |

|Week 5 | |

|Sep 21 |The Essentials of Firm Growth |Chapter 5 |

|Sep 23 |Understanding Capital Budgeting |Chapter 6 |

| |PPM Revenue Model Due | |

|Week 6 | |

|Sep 28 |Financial and Operating Leverage |Chapter 7 |

|Sep 30 |Raising Funds Externally |Chapter 8 |

| |VC Critiques Due | |

|Week 7 | |

|Oct 5 |Full Review of All Material on Exam |Chapters 1 - 8 |

|Oct 7 |Mid-Term Exam (1st half material) |Chapter 8 |

|Week 8 | | |

|Oct 12 |Fundamentals of Equity and LT Debt |Chapter 9 |

|Oct 14 |Fundamentals of Equity and LT Debt (cont.) |Chapter 9 |

| | | |

|Week 9 | | |

|Oct 19 |Term Structure Differences in Debt |Chapter 10 |

|Oct 21 |Interactive Workshop on PPMs | |

|Week 10 | |

|Oct 26 |Short Term Debt: More or Less Risky? |Chapter 11 |

| |PPM Cash Flow Model Due | |

|Oct 28 |How is Leasing Different? |Chapter 11 |

| | | |

|Week 11 | | |

|Nov 2 |International Aspects of Credit |Chapter 12 |

|Nov 4 |Fundamentals of Liquidity |Chapter 13 |

| | | |

|Week 12 | | |

|Nov 9 |A/R: Issues and Opportunities |Chapter 14 |

|Nov 11 |PPM Workshop |Your PPM |

| | | |

|Week 13 | | |

|Nov 16 |Characteristics of Suitable Acquisitions |Chapter 15 |

|Nov 18 |Fundamental Considerations in Acquisitions |Chapter 16 |

| | | |

|Week 14 | | |

|Nov 23 |Basic Exit Strategies |Chapter 17 |

| |PPM Full Draft Due | |

|Nov 25 |Thanksgiving Break |Eat Turkey |

| | | |

|Week 15 | | |

|Nov 30 |Second Half Exam Review Session |Chapters 1 through 17 |

|Dec 2 |Second Exam (2nd half focused) |Emphasis 9 to 17. |

| |Final PPM due on final exam date and time | |

It is your responsibility to be on time, prepared and in the right place for all exams.

V1 08232015

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FBE 437 Grading Criteria:

Class Participation/Attendance/Projects

20%

Midterm

40%

Final Exam

40%

Total

100%

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