Finance of the Firm 2600-DSMw2FP
Lecture:
1. Principles, objectives, and functions of financial management:
• Positioning of corporate finance within the science of finance
• Basic importance and definitions related to corporate finance
• Objectives and functions of financial management
• The relationship between finance and other business areas
2. Information contained in basic financial documents
• Fundamental analysis
• Ratio analysis
3. Corporate finance from the perspective of different stakeholders analyzing their financial situation
4. Sources of capital
• Sources of equity capital
• Sources of debt capital
5. Short-term management of corporate finance
6. Investment decisions and their assessment in the short and long term
7. Risk and return
8. The relationship between investment and financial decisions
9. The use of real options in corporate finance
10. Financial management in international markets
Exercises:
1. Introduction to corporate finance
2. The time value of money:
• Future value and present value
• Effective interest rate
• Annuity payments in advance and arrears
3. Specifics of stocks and bonds
• Differences between equity and debt capital
• Rights arising from stocks and bonds
• Types of bonds and stocks
4. Valuation of stocks using the Gordon model (including with growing dividends). Valuation of bonds with a fixed coupon rate
5. Risk and return. Analysis of dependencies - Capital Asset Pricing Model (CAPM)
6. The cost of capital in a company: equity, debt, and weighted average cost of capital (WACC).
7. Systematic and unsystematic risk:
• Beta coefficients
• Hamada’s model
• Economic value added
8. Assessment of investment decisions made under certainty:
• Net present value (NPV)
• Internal rate of return (IRR)
• Modified internal rate of return (MIRR)
• Payback period (BP)
• Discounted payback period (DBP)
9. Financial statement overview - agency problems, auditor's opinion, components of the financial statement
10. Financial statement components:
• Balance sheet
• Income statement
• Cash flow statement
• Statement of changes in equity
• Notes to the financial statements
11. Analysis of financial statements. Ratio analysis - assessment of:
• Liquidity
• Efficiency
• Indebtedness and ability to service debt
• Profitability
• Capital market
12. Analysis of the break-even point. Operational, financial, and combined leverage
13. Assessment of operational and financial risk using the concepts of break-even point and leverage
14. Working capital management. Inventory management model
15. Mergers and acquisitions. Motives for mergers. Assessment of effectiveness. Share buybacks
Type of course
Mode
Course coordinators
Learning outcomes
Upon completion of the course, the student:
In terms of knowledge
• correctly uses terminology related to corporate financial management (K_W01)
• identifies the principles and procedures for creating financial management strategies for enterprises (K_W02)
• recognizes the principles of evaluating financial statements in an enterprise (K_W02)
• identifies the principles of utilizing own and external sources of financing (K_W02)
• identifies the principles of economic calculation based on the time value of money (K_W03)
•
In terms of skills:
• diagnoses issues related to acquiring and effectively investing capital in organizations (K_U01)
• interprets the impact of economic processes and financial management on the functioning of organizations (K_U02)
• analyzes atypical problems related to corporate financial management in a team setting (K_U05)
• collaborates in a team to prepare case study analyses (K_U07)
• Independently develops a fundamental analysis of a selected enterprise outside of classes (K_U08)
In terms of social competences:
• assesses complex phenomena related to financial management in organizations from the perspective of various stakeholders (K_K01)
• develops entrepreneurial solutions impacting organizational growth based on presented case studies (K_K04)
• promotes adherence to ethical standards related to financial activities (K_K05)
Assessment criteria
The exam is in the form of a multiple-choice test conducted on the E-learning platform in a lecture hall. In the assessment of the exam, negative and half points are not applied. Only individuals who have passed the exercises are allowed to take the exam. A very good grade from the exercises and attendance at lectures entitle the student to be exempted from the exam.
The completion of the exercises is carried out through a summative colloquium consisting of 2/3 practical tasks related to financial decision-making in an enterprise, based on an initial analysis of its financial situation. The student is required to participate in the exercises and actively engage in solving problem tasks and case study analyses. In the event of more than two unexcused absences, the student may be barred from taking the final assessment.
Bibliography
Basic Literature:
Cieślik R., Postuła M. (eds.) Financial Management of a Company – Theory and Practice, WN WZ UW, Warsaw 2020.
Postuła M. (ed.) Corporate Finance in Managerial Decisions, WN WZ UW, Warsaw 2016.
Supplementary Literature:
Rutkowski A. Financial Management, PWE, Warsaw 2016.
Ehrhardt M.C., Brigham E.F. Corporate Finance: A Focused Approach, 6th edition, South-Western, 2016.
Selected articles from “McKinsey on Finance”, “The Economist”.
Educational publications of the Polish Financial Supervision Authority (KNF).
Additional information
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: