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Prospectus

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Financial Management (minor Science Based Business)

Course
2020-2021

Admission requirements

3rd year Bachelor students

Description

Financial Management is an introductory course integrating concepts of corporate finance with investments and the money/capital markets. Topics include the role of money in the economy; the time value of money; financial analysis and planning; security valuation and capital market theory, capital budgeting; short- and long-term financing; and working capital management. Value maximization and risk/return trade-offs in financial decision making are employed as integrative concepts throughout the course.

This course is intended for anyone interested in decisions which are made based on financial analysis, applying the input-process-output model of Situation- Challenges-Value Proposition.

Topics covered:

  • Students will estimate cash flows and risk and use these values to compute NPV and IRR. Students will be able to adjust cash flows to account for changes in working capital, asset disposal, and depreciation; make purchase decisions based on these calculations; explain how to make decisions when capital constraints exist or when projects are mutually exclusive.

  • Students will solve equations involving a single payment, an annuity or complex cash flows. Students will choose among investment opportunities, payment arrangements, etc. based on these calculations.

  • Students will evaluate corporate performance using comparative analysis. Based on this analysis they can relate strengths and weaknesses and make and support recommendations to improve financial performance and create sustainable long-term value.

Course objectives

This course provides students insights in value creation: to compute the value of expected future cash flows at any point of time, to be discounted to the value as of now (the decision moment).
At the end of the course students will be able to:

  1. use the basic techniques for investment evaluation;
  2. link the major debates in corporate finance to real life cases;
  3. have a real understanding of the major debates in corporate finance:
  • Utilize the time value of money (based on i.e. NPV and IRR) and financial statement analysis in capital budgeting decision making;

  • Discuss the impact of risk on cost of capital;

  • Estimate the intrinsic value of investment securities and determine whether or not they should be purchased given the current market price;

  • Discuss the benefits and disadvantages of selecting debt or equity to finance corporate activities.

Timetable

The (preliminary) schedule can be found at the Science Based Business website.

Detailed table of contents can be found on uSis. 

Mode of instruction

2-hour interactive lectures, presentations and discussions every week, 6 weeks long.
The idea is to make the exercises in advance, in order to reinforce your knowledge and understanding. Moreover we will use case studies which we will work out in class and related articles as readers. To enliven the presentations, the teacher will share personal practical experiences, also to match the link with practical business.
This course – action-based learning - emphasises small-scale, interactive teaching that focuses on real-life case studies. In hindsight debrief on what really happened.

Assessment method

Assessment
Assessment is as follows: 20% for class participation, 30% for group assignments on cases that are presented and discussed in class, and 50% for the final written exam (multiple choice). Final grading must be a 6 (six) to pass.

Class participation (20% of final mark)
Students are expected to actively participate in case discussions in class.

Assignments (30%)
Students are required to submit a total of 6 assignments. These assignments should be written in the format of a one-page memo that addresses a question about the case study that is discussed in class the next day. Assignments should be submitted by midnight the day before the class via Blackboard.

The marking range for assignments is 0 to 3 points per session. A score of 0 is the default for students who do not hand in their assignments on time without a valid reason.

Exam (50%)
Students must register for the exam in uSis at the latest 10 working days before the date of the exam.
Students must notify the SBB coordinator (info@sbb.leidenuniv.nl) if they wish to resit the exam.

A week after the grades are released a date, time & location will be announced on Brightspace for students to inspect their exam and ask for feedback. Should there be any questions about this, the teacher will clearify.

Reading list

The following book will be used:
Brigham/Ehrhardt/Fox, Financial Management: Theory and Practice - 9781473729605
Please consult the course syllabus on Blackboard before purchasing books.

Registration

Students have to register for the course in uSis. Click here for instructions.

This course can only be followed as part of the SBB minor (15 or 30 ECTS).

Contact

info@sbb.leidenuniv.nl

Remarks

  • Students are responsible for enrolling/unenrolling themselves for (partial) exams/retakes.

  • Students are responsible for enrolling themselves for (partial) exams/retakes.

  • The deadline for enrolling for an exam/retake is 10 calendar days before the exam/retake takes place (exam date - 10 = deadline enrolling date).

  • Students who do not enroll themselves for an exam/retake by the deadline are not allowed to take the exam/retake.

  • Students fail the course if any of the components that make up the final mark of the course is assessed below 5.0.

  • The final grade is expressed as a whole or half number between 1.0 and 10.0, including both limits. The result is not to be expressed as a number between 5.0 and 6.0.

  • If one of the components of the final mark constitutes a component that assesses attendance or class participation, students cannot take a retake for this component. Therefore, students fail the course if their mark for this component is less than 5.0.

  • It is not possible to do retakes for group assignments. Therefore, if students fail the group assignment component, they fail the course.

  • Students pass the course if the final mark is 6.0 or higher (5.49 will rounded down to a 5 and a 5.5 will be rounded up to a 6.0).

  • For courses, for which class participation is an assessment component, students may not be penalised for an absence if the student has a legitimate justification for this absence. The student must notify the program coordinator via email (info@sbb.leidenuniv.nl) of such an absence BEFORE the lecture, describing the reason for missing the lecture. If the student does not notify the program coordinator before the lecture, the student will be penalised. Students may be required to provide further documentation to substantiate their case, and class attendance requirements are only waived under exceptional circumstances such as illness.

  • Students who are entitled to more exam/retake time must report to info@sbb.leidenuniv.nl 10 days before the exam/retake takes place.