Finance of the Firm 2600-DSMw2FP

The aim of the course is to present the basic concepts of financial management from the point of view of a manager in a company that is not a financial institution. During the course, knowledge of analytical tools used in the theory of corporate finance and in practical decisions made in economic organizations shall be presented. Each decision shall be analyzed taking into account the consequences in terms of cash flows. Spreadsheets shall be used in the financial analyzes.

1. Introduction to corporate finance. Areas of finance. Agency problem. Principles of finance.
2. Analysis of financial statements. Ratio analysis. Assessment of liquidity, efficiency, debt, profitability and market value.
3. Time value of money. Capitalization, future value and present value. Ordinary annuity, annuity due. Growing annuity payments. Perpetuity. Gordon model. Effective interest rate. Inflation.
4. Assessment of capital budgeting decisions made under conditions of certainty. Project evaluation criteria: net present value, internal rate of return modified internal rate of return, payback period. Non-profit investments.
5. Risk and rate of return. Analysis of interdependencies.
6. Cost of capital. Components of the cost of capital. Debt. Ordinary equity. Weighted average cost of capital. Hamada model. Economic value added.
7. Long-term sources of enterprise financing. Equity, debt, leasing. Hybrid financing.
8. Break-even analysis. Operating, financial and total leverage. Operating and financial risk assessment using the break-even concept and leverage.
9. Break-even analysis. Operating, financial and total leverage. Operating and financial risk assessment using the concepts of break-even and leverage.
10. Mergers and acquisitions. Reasons for mergers. Assessment of company combination. Share repurchase