Postgraduate Course: Corporate Finance (CMSE11342)
Course Outline
| School | Business School |
College | College of Humanities and Social Science |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Not available to visiting students |
| SCQF Credits | 15 |
ECTS Credits | 7.5 |
| Summary | This course provides an introduction to the core concepts and skills in corporate finance and financial accounting. It considers the main financial decision facing a company, reviews current academic thinking on how these decisions are made and introduces analytical tools that can assist in financial decision-making. Particular areas of focuas are capital budgeting, capital structure, dividend policy and risk management strategies. |
| Course description |
The course objectives are to equip students with a clear understanding of both basic and advanced corporate finance issues. The course will teach students to apply their understanding of theories and corporate finance models in real world situations. The objective is to develop the theoretical and practical tools for students who are embarking on a career in finance or who wish to move to a senior management career from a finance specialisation.
Syllabus:
- Time Value of Money;
- Investment Decisions and Appraisal Techniques;
- Reorganising Financial Statements into Cash Flows;
- Estimating Discount Rates;
- Valuing Bonds and Stocks;
- Dividend Policy;
- Valuing M&A;
- Valuing Real Options'
- Currency and Interest rate risk management
Student Learning Experience
The course orgainser has prepared the following more modular experiences to enhance the learning process
A group project assignment geared to real world applications, requiring research and collection of data, spreadsheet, design and analysis, which will expose the students to the process likely involved in tasks they will require to perform in their actual corporate jobs in the future;
Speaker from the finance industry, who will provide the students with a practitioners perspective and illuminate the applicability of the topics covered in the course.
Within the tutorials, the students will go through the design of an algorithm for solving the different types of computational problems, as well as more complex spreadsheet design.
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
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Co-requisites | |
| Prohibited Combinations | |
Other requirements | For Business School PG students only, or by special permission of the School. Please contact the course secretary. |
Course Delivery Information
| Not being delivered |
Learning Outcomes
On completion of this course, the student will be able to:
- Understand and apply discounted cash-flow analysis, with critical understanding of how to allow for uncertainty.
- Understand and critically discuss the concept of the weighted average cost of capital and the effect of gearing on the WACC.
- Critically evaluate the main theories to explain a company's gearing and dividend policies.
- Critically discuss how a company can use the main techniques and instruments available to manage currency and interest rate risk.
- Critically evaluate the main issues in managing debt and in managing working capital.
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Reading List
Selected chapters will be covered from:
Hillier, D. et al., (2014) Corporate Finance, 2nd European Edition, New York: McGraw-Hill Education
Damodaran, A. (2015) Applied Corporate Finance, 5th Edition, New York, John Wiley & Sons Ltd.
Other good corporate finance texts (whicih will not be used) include:
- Brealey, R.A., Myers, S.C & Allen, F., Principles of Corporate Finance, McGraw-Hill
- Berk, J. & DeMarzo, P., Corporate Finance, Pearsons
- Megginson, W.L., Smart, S.B & Gitman, L.J., Corporate Finance, Thomson South-Western |
Additional Information
| Graduate Attributes and Skills |
Knowledge and Understanding:
After completing this course, students should be able to:
- Know how to conduct a discounted cash-flow analysis, including how to allow for uncertainty;
- Understand the concept of the weighted average cost of capital and the effect of gearing on the WACC;
- Be familiar with the main theories to explain a company's gearing and dividend policies;
- Understand how a company can use the main techniques and instruments available to manage currency and interest rate risk;
- Be familiar with the main issues in managing debt and in managing working capital;
- Have a knowledge of the issues that arise in managing a multinational company.
Cognitive Skills:
After completing this course, students should be able to:
- Solve quantitative problems using time-lines;
- Build and use payoff profiles in the analysis of exposure to risk
- Design spreadsheets for solving financial problems;
- Comprehend financial texts and extract meaningful information from them for financial decision making;
- Express clearly, verbally and in writing, relationships between financial variables, sensitivity of results to different factors, formulate logical recommendations.
Subject Specific Skills:
After completing this course, students should be able to:
- Calculate the cash flows a firm generates from its financial statements;
- Calculate NPV and construct an NPV profile (the graphical relationship between NPV and the discount rate);
- Analyse a potential investment only based on its NPV profile;
- Collect the necessary input data and calculate the weighted average cost of capital of a company;
- Generate scenarios and perform sensitivity analysis in the context of NPV and WACC calculations;
- Calculate the cost of hedging for basic currency and interest rate risk management instruments. |
| Keywords | Not entered |
Contacts
| Course organiser | |
Course secretary | Miss Rachel Allan
Tel: (0131 6)51 3757
Email: Rachel.Allan@ed.ac.uk |
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