Prospectus

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Financial Management

Course
2019-2020

Subject to changes

Admission requirements

Master students

Description

Financial management is the subject which deals with both sides of the corporate balance sheet: which projects should a corporation take on and what is the best way to finance them? In Financial management we study how corporation’s take investment decisions, but especially how they should take them. What return should a corporation make on its investments? How do you value options in an investment project? How do you deal with risk in an investment project? How do you value an asset or a corporation? If a project is worthwhile, in an efficient capital market a corporation should always be able to find funding for it. Are capital markets efficient? How do you value bonds and stocks? Does it matter how much dividend a corporation pays out to its shareholder? Are hostile takeovers a good or a bad thing? In this course we will focus on the big questions in corporate finance.

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

By the end of this course, the student should be able to:
1. use the basic techniques for investment evaluation;
2. ink 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

Preliminary schedule
Semester 1:

  • Course: September 4th – September 27th 2019

  • Exam: October 2nd 2019, 14:15 – 17:15 hrs
    Semester 2:

  • Course: March 24th – April 28th 2020

  • Exam: May 11th 2020, 10:15 – 13:15 hrs

The latest version of the schedule can be found on the SBB website.

Mode of instruction

  • 6 seminars

  • Preparation for each seminar

  • Group assignment

  • Group presentation

  • 3-hour exam

2-hour interactive lectures, presentations and discussions every week, 6 weeks long.
The idea is to make the exercises in advance - in groups -, 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 (and personal appearances of guest speakers), 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.

Course Load

· 6 interactive classes/case discussion seminars of 2 hours each = 12 hours · Self-study with reader = 240 pages / 8 pages per hour = 30 hours · (Group) assignments = 4 assignments x 9 hours per assignment = 36 hours · Class participation = 6 lectures x 1 hour per lecture focused on participation = 6 hours · Final 3-hour exam

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, individual components must be awarded with at least a 5 (five).

Class participation (20% of final mark)
Students are expected to actively participate in case discussions in class. Each session, two students are assigned the role of Assessor (see Blackboard). These students will aid the lecturer by noting down the number of contributions that students make and assessing the contributions’ relevance and value. These assessors are exempted from the case discussion of that session and, hence, will not receive a grade. Directly after a session, the assessors fill in the case discussion assessment form. The lecturer determines marks for class participation based on these assessment forms and the lecturer’s own assessment of students.

The marking range for participation is 0 to 3 points per session. A score of 0 is the default for students who do not show up for class without a valid reason.

To ensure that their class participation is properly assessed students are required to use the name card they are provided by SBB during each class.

Group assignments (30%)
Students are assigned to groups, which are announced on Blackboard on the first day of the course at the latest. Group assignments are listed on the Blackboard site of the course. Students are required to submit a total of 8 group assignments. These group 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. Group assignments should be submitted by midnight the day before the class via Blackboard.

The marking range for group 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.

We ask students to notify SBB staff as soon as possible in case of problems with group members so that we can step in and resolve these problems.

Exam (50%)
Students must notify the SBB coordinator (info@sbb.leidenuniv.nl) if they wish to resit the exam.

Blackboard

Yes, students can go to Blackboard to enroll themselves.

Reading list

Mullins, J. 2006. The New Business Road Test. FT Prentice Hall
Osterwalder, A. et.al. 2014. Value Proposition Design. Wiley.
Ries, E. 2011. The Lean Startup: How Constant Innovation Creates Radically Successful Businesses. Portfolio Penguin

A study pack with course readings and case studies can be purchased at the start of the course. More information will follow on Blackboard after registration.

In addition, 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. The registration in uSis will open two months before the start of the academic year. Click here for instructions.

There is limited capacity for external students. Please contact the programme coordinator.

More information on the different types of registration can be found here.

Contact

info@sbb.leidenuniv.nl