Introduction to Corporate Finance

Start Date: 07/05/2020

Course Type: Common Course

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About Course

This course provides a brief introduction to the fundamentals of finance, emphasizing their application to a wide variety of real-world situations spanning personal finance, corporate decision-making, and financial intermediation. Key concepts and applications include: time value of money, risk-return tradeoff, cost of capital, interest rates, retirement savings, mortgage financing, auto leasing, capital budgeting, asset valuation, discounted cash flow (DCF) analysis, net present value, internal rate of return, hurdle rate, payback period.

Course Syllabus

Welcome to Introduction to Corporate Finance! This first module will introduce you to one of the most important foundational concepts in Finance, the time value of money. Before diving into the Video lectures, I encourage you to take a look at the brief pre-reading for the course. Specifically, have a look at “Big Picture Course Motivation,” for additional motivation and context for the course, “Time Value of Money Overview,” for a motivation and context for our first topic, and “Quiz Problem Answer Input.” This last note is particularly important to avoid confusion with the problem sets. Then, go to the Video Lectures and start learning Finance!

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Course Introduction

Introduction to Corporate Finance Corporate Finance is the part of the finance portfolio management specialty, focusing on identifying, managing, and funding financial transactions. Upon successful completion of this course you will be able to: • Understand the key financial statements of a company • Understand the purpose for which financial information is provided • Know the key financial statements of a company • Understand the terminology and concepts of financial planning • Understand the purpose for which financial information is provided • Understand the meaning of key financial statements • Understand the meaning of key financial statements of a company This course is designed to give you a head start on identifying and starting the process of creating your own strategy with regard to financial transactions. This is not a course designed to simply give you a head start on analyzing financial statements. Rather, this course will help you get up to speed on the way financial information is provided to you by your company, and will give you a head start on identifying transactions that are likely to affect your company’s bottom line. Upon completing this course, you will be able to: 1. Identify the purpose for which financial information is provided to you 2. Understand the purpose for which financial information is provided to you 3. Know the key financial statements of a company 4. Understand the purpose for which financial information is provided to you 5. Under

Course Tag

Discounted Cash Flow Decision-Making Corporate Finance Cash Flow Analysis

Related Wiki Topic

Article Example
Corporate finance Corporate finance is the area of finance dealing with the sources of funding and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, and the tools and analysis used to allocate financial resources. The primary goal of corporate finance is to maximize or increase shareholder value. Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms.
Corporate finance Use of the term "corporate finance" varies considerably across the world. In the United States it is used, as above, to describe activities, analytical methods and techniques that deal with many aspects of a company's finances and capital. In the United Kingdom and Commonwealth countries, the terms "corporate finance" and "corporate financier" tend to be associated with investment banking – i.e. with transactions in which capital is raised for the corporation. These may include
Corporate finance The terms corporate finance and corporate financier are also associated with investment banking. The typical role of an investment bank is to evaluate the company's financial needs and raise the appropriate type of capital that best fits those needs. Thus, the terms "corporate finance" and "corporate financier" may be associated with transactions in which capital is raised in order to create, develop, grow or acquire businesses. Recent legal and regulatory developments in the U.S. will likely alter the makeup of the group of arrangers and financiers willing to arrange and provide financing for certain highly leveraged transactions.
Principles of Corporate Finance Principles of Corporate Finance is a reference work on the corporate finance theory edited by Richard Brealey, Stewart Myers, and Franklin Allen. The book is one of the leading texts that describes the theory and practice of corporate finance. It was initially published in October 1980 and now is available in its 12th edition. "Principles of Corporate Finance" has earned loyalty both as a classroom tool and as a professional reference book.
Corporate finance In conjunction with NPV, there are several other measures used as (secondary) selection criteria in corporate finance. These are visible from the DCF and include discounted payback period, IRR, Modified IRR, equivalent annuity, capital efficiency, and ROI. Alternatives (complements) to NPV include Residual Income Valuation, MVA / EVA (Joel Stern, Stern Stewart & Co) and APV (Stewart Myers). See "list of valuation topics".
Principles of Corporate Finance The book covers a wide range of aspects relevant to corporate finance, illustrated by examples and case studies. The text starts with explaining basic finance concepts of value, risk, and other principles. Then the issues become more and more complex, from project analysis and net present value calculations, to debt policy and option valuation. Other discussed topics include mergers and acquisitions, principal–agent problems, credit risk, working capital management, etc. The book concludes with a discussion on the current limitations of the corporate finance theory.
Corporate finance Achieving the goals of corporate finance requires that any corporate investment be financed appropriately. The sources of financing are, generically, capital self-generated by the firm and capital from external funders, obtained by issuing new debt and equity (and hybrid- or convertible securities). As above, since both hurdle rate and cash flows (and hence the riskiness of the firm) will be affected, the financing mix will impact the valuation of the firm. There are two interrelated considerations here:
Journal of Applied Corporate Finance The Journal of Applied Corporate Finance is a quarterly academic journal covering research in corporate finance, including risk management, corporate strategy, corporate governance, and capital structure. It also features roundtable discussions among corporate executives and academics on topics such as integrity in financial reporting. It was established in 1988 and is published by Wiley-Blackwell. The editor-in-chief is Donald H. Chew, Jr. From 2004 to 2013, the journal was owned by Morgan Stanley, but is now owned and operated by its editors and by Carl Ferenbach, a retired private equity investor.
Experimental finance Fields to which experimental methods have been applied include corporate finance, asset pricing, financial econometrics, international finance, personal financial decision-making, macro-finance, banking and financial intermediation, capital markets, risk management and insurance, derivatives, quantitative finance, corporate governance and compensation, investments, market mechanisms, SME and microfinance and entrepreneurial finance.
Finance Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance) and by a wide variety of other organizations such as schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.
Finance Finance is a field that deals with the study of investments. It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainty and risk. Finance can also be defined as the science of money management. Finance aims to price assets based on their risk level and their expected rate of return. Finance can be broken into three different sub-categories: public finance, corporate finance and personal finance.
Finance Directorates Prior to the creation of the Finance Directorates in 2010, many of their responsibilities were undertaken by the Scottish Government Finance and Corporate Services Directorates and prior to 2007 by the Scottish Executive Finance and Central Services Department.
Managerial finance Managerial finance is an interdisciplinary approach that borrows from both managerial accounting and corporate finance.
Cavendish Corporate Finance Cavendish Corporate Finance was co-founded in 1988 by Howard Leigh (now Lord Leigh), Senior Partner at Cavendish and Hugo Haddon-Grant, who currently acts as a business consultant for the company.
Finance and Corporate Services Directorates The Scottish Government Finance and Corporate Services Directorates were a set of directorates of the Scottish Government. They were responsible for delivering ministerial support, human resources, legal services and procurement to the other directorates. In December 2010 these functions were taken on by the Governance and Communities Directorate and the Finance Directorate.
Corporate services Corporate services such as finance and banking, were first introduced to remove pressure from the client's organisation when dealing with complex banking and finance issues. Specialist information and tips are provided by the consultancy to manage finances appropriately, and some can set up a corporate bank account for clients. Some examples of tailored services include:
Corporate finance In general, each project's value will be estimated using a discounted cash flow (DCF) valuation, and the opportunity with the highest value, as measured by the resultant net present value (NPV) will be selected (applied to Corporate Finance by Joel Dean in 1951). This requires estimating the size and timing of all of the "incremental" cash flows resulting from the project. Such future cash flows are then discounted to determine their "present value" (see Time value of money). These present values are then summed, and this sum net of the initial investment outlay is the NPV. See Financial modeling.
Cavendish Corporate Finance Prior to forming Cavendish Corporate Finance, Lord Leigh of Hurley worked at Deloitte Haskins & Sells, the accountancy firm, where he helped set up a mergers and acquisitions group. Hugo Haddon-Grant has previous experience with the Business Exchange and was previously with the accountancy firm Grant Thornton.
Corporate finance Managing the corporation's working capital position to sustain ongoing business operations is referred to as "working capital management". These involve managing the relationship between a firm's short-term assets and its short-term liabilities. In general this is as follows: As above, the goal of Corporate Finance is the maximization of firm value. In the context of long term, capital budgeting, firm value is enhanced through appropriately selecting and funding NPV positive investments. These investments, in turn, have implications in terms of cash flow and cost of capital. The goal of Working Capital (i.e. short term) management is therefore to ensure that the firm is able to operate, and that it has sufficient cash flow to service long-term debt, and to satisfy both maturing short-term debt and upcoming operational expenses. In so doing, firm value is enhanced when, and if, the return on capital exceeds the cost of capital; See Economic value added (EVA). Managing short term finance and long term finance is one task of a modern CFO.
Corporate finance This area is related to corporate finance in two ways. Firstly, firm exposure to business and market risk is a direct result of previous capital financial investments. Secondly, both disciplines share the goal of enhancing, or preserving, firm value. There is a fundamental debate relating to "Risk Management" and shareholder value. Per the Modigliani and Miller framework, hedging is irrelevant since diversified shareholders are assumed to not care about firm-specific risks, whereas, on the other hand hedging is seen to create value in that it reduces the probability of financial distress. A further question, is the shareholder's desire to optimize risk versus taking exposure to pure risk (a risk event that only has a negative side, such as loss of life or limb). The debate links the value of risk management in a market to the cost of bankruptcy in that market.