THE UNIVERSITY OF MICHIGAN - DEARBORN
GBUS 502 – Managerial finance
Spring 2011
INSTRUCTOR: Vicentiu Covrig, Ph.D., CFA
OFFICE: JH4109
PHONE #: 818-677-3405
E-MAIL: vcovrig@csun.edu
WEB: csun.edu/~vcovrig
OFFICE HOURS: 5:30-7:00pm, before our class
Class number: JH 1121
COURSE OBJECTIVE:
This course provides a market-oriented framework for analyzing the major types of financial decisions made by corporations. Lectures will provide a thorough introduction to discounted cash flow techniques, capital budgeting, financial asset valuation, time value of money, risk and returns and other corporate financial issues.
COURSE RESOURCES:
Readings: Brigham and Houston “ Fundamentals of financial management” COINCISE 6th edition
Supplemental: A financial calculator, e.g. Texas Instrument BA II+, HP12C is required. You are responsible to read the manual in order to become proficient in the use of your calculator. Sharing calculators during any exam is prohibited
Computational capabilities, especially spreadsheets, word processing and access to electronic mail and internet resources.
Wall Street Journal and Barron’s for keeping abreast of current events.
Online Materials:
Prior to each week’s class, materials (e.g. slides, Excel spreadsheets) and important announcements, will be made available on csun.edu/~vcovrig, under the link for GBUS502
GRADING:
A. Composition
Midterm Exam 30%
Final Exam 30%
Assignment and Class Participation 15%
Group project 25%
B. Notes
Examinations
■ non-cumulative in nature
■ coverage: assigned topics
■ multiple choice and numerical questions
Class participation will be evaluated by the instructor over the term and will take into account attendance and active participation in class discussions.
C. Scale
97% - 94% A ; 93% - 90% A- ;
89% - 87% B+ ; 86% - 83% B ; 82% - 80% B- ;
79% - 77% C+ ; 76% - 73% C ; 72% - 70% C- ;
69% - 60% D's ; < 60% F
D. Cheating and plagiarism will not be tolerated. If you are caught cheating or plagiarizing in any form, you will receive a failing grade for the course and reported to the University for appropriate action. Be aware that I caught students cheating before and I enforced the above policies.
Absence from examination will only be granted to students who can provide official documentation of illness or personal emergency. The students are responsible for informing the instructor as soon as possible (and preferably in advance) regarding a missed examination. Otherwise, students will receive a score of zero for missing examinations.
G. You are responsible for coming prepared to all classes. Readings should be done in advance of class in which the assigned materials will be discussed. If for whatever reason you miss a class, it is your responsibility to get the material and any announcements that you miss. If you have questions about what you miss, ask me or a classmate prior to the next class meeting. In addition, you should bring a calculator to each class so that you can participate in working through in-class numerical problems.
Positive contributions to the learning experience of the class will be greatly appreciated.
TENTATIVE COURSE SCHEDULE
Date Topic Chapter
1/24 Introduction
An overview of Financial Management 1
1/31 Financial statements, cash flows and taxes 3
2/7 Analysis of financial statements 4
2/14 No class meeting
Financial Markets and Instruments 2
2/21 Time value of money 5
2/28 Interest Rates 6
3/7 Risk and rates of return 8
3/14 Midterm exam (chapters #1,2,3,4,5,6)
3/21 Stocks and their valuations 9
3/28 Bonds and their valuations 7
4/11 . No class meeting.
Work on the company valuation project.
4/18 The cost of capital 10
4/25 Advanced company valuation
5/2 . The basics of capital budgeting 11
5/9 Project presentations.
Final exam (chapters #7,8, 9, 10, 11)
Assignment: due in hard copy on the final exam day
Integrated case Allied Food Products, questions a. to e., f.1 and f.3.
Company valuation (group project)
Pick up a company with a market capitalization (market value of equity) greater than $20 billion and a dividend yield greater than 2%. Choose a nonfinancial company.
Prepare the following in Excel:
i) Short business description of the company: Major lines of business and/or products and recent developments; Relative position in the industry ;Extent of international operations
ii) Business environment and Industry Analysis: Identify and summarize major economic, demographic, political and technological trends, and analyze how these trends will affect the financial performance of the company and its common stock. (Reference: Chapter 9)
iii) Choose one close competitor. Gather the Bs and IS for last three years for both companies.
iv) Ratio analysis: calculate and discuss all ratios for your subject company and the comparable company in the same industry; data for last three years.
v) Calculate the company’s Cost of Equity
vi) Calculate the intrinsic value of the equity using three years of constant growth (g1) and terminal value using the long term growth (g2) (chapters 2. 9 and 10)
vii) Compare the value per share with the market share price. Discuss some reasons why the two are not very close.
Sources of information: Yahoo Finance, Mergent Online (online database through the library), Google Finance, MSN Money, SEC filings, any other source you find useful.
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