Finance 5405
ESSENTIALS OF MANAGERIAL FINANCE
Fall 1998
TABLE OF CONTENTS
I.General Information ...... 1
II.Academic Integrity Policies...... 3
III.Class Preparation ...... 4
IV.Examinations and Grading ...... 6
V.Class Schedule ...... 8
Reserve Listing...... 11
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TERM:Fall 1998
COURSE
NUMBER:FIN 5405
COURSE
TITLE:Essentials of Managerial Finance
PREREQUISITES:ACG 2021 or equivalent and STA 2023 or equivalent.
CATALOG DESCRIPTION: An introductory course covering principles and techniques applicable to financial management of the firm. Required for MBA candidates who have not had undergraduate or equivalent foundation work in financial management.
INSTRUCTOR:Dr. Cheryl Frohlich
OFFICE:42/3210
OFFICE HOURS:M, W 11:00-11:30
M, W 2:30-4:30
and by appointment.
PHONE:620-2630 (office); 223-9516 (home)
CLASS TIME: M, W 7:30- 8:45 p.m.
REQUIRED TEXT:Essentials of Managerial Finance by J. Fred Weston, Scott Besley, and Eugene F. Brigham
Financial Calculator (Texas BAII Plus will be used in class)
DROP DATE:Friday, November 6, 1998
FINAL EXAM:FIN 5405: Thursday, December 10, 7:30- 9:20 p.m.
WHY TAKE FINANCE?
Finance is the language of business. Understanding finance is essential for all business students whether the intended major is management, marketing, law, or accounting. A finance background provides a graduate with fundamental training that can be used in all aspects of organizational activity, whether commercial, governmental, or institutional.
THIS COURSE INTENDS
This course will expand students' understanding of the analytical techniques used in corporate finance and to explore how these techniques are used to identify and solve practical financial problems. It will be assumed throughout this course that all students have taken the previous prerequisites. This implies that the students must have working knowledge of basic theoretical concepts discussed in that course, such as time value of money, statement analysis, standard deviations correlation coefficients, covariances, etc.
WRITTEN COMMUNICATION REQUIREMENT:
A case involving a historical analysis of a company with an accompanying forecast of its balance sheet, income statement, common size and ratio analysis will be completed. The case method presents real world situations as closely as possible to the manner in which a manager would face them. Unlike the usual problems in textbooks, cases are longer, provide more information on the companies represented, and present many of the uncertainties facing decision-makers in an actual situation. You will seldom know what the answer is or should be. Rather, you can only identify what you perceive to be the problem(s), analyze alternative solutions, and select the approach most appropriate for the particular set of facts in the case. You should concentrate on the spot but only after thorough analysis of the facts. Great significance will be placed on (1) your ability to reach sound decisions that are consistent with your analysis and (2) your ability to communicate your analysis in an effective manner.
ORAL COMMUNICATION REQUIREMENT:
Each Student is expected to give an oral presentation on the ratio analysis of activity ratios within the case. In addition, each student will be expected to present the solution of class problems/cases explaining the concepts involved. Finally, oral presentation skills will be demonstrated through class participation.
COMPUTER APPLICATIONS:
Several spreadsheet software packages are available. Use of one of these packages will be required to complete their cases and some homework assignments.
INTERNATIONAL COVERAGE:
One section on multinational Managerial Finance is covered.
ENVIRONMENTAL ISSUES COVERED:
None
ETHICAL ISSUES COVERED:
Ethics will be discussed as it pertains to the use of finance in managerial decisions and its impact upon the organization.
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ACADEMIC INTEGRITY POLICIES
ETHICS AND CODE OF CONDUCT
In today's environment, ethics has become an extremely important topic. These characteristics are not bestowed upon you at graduation but are developed over time. The College of Business Administration has published an undergraduate handbook which includes a Code of Conduct (Pages 2-3). All items listed will be strictly enforced. Any student violating any aspect of the code of conduct will be penalized and receive a grade of `F' for the course and referred to the proper authorities for expulsion from the University. Specific items that relate directly to this course are:
Cheating
Intentionally using or attempting to use unauthorized materials, information, notes, study aids or other devises in any academic exercise. This definition includes unauthorized communication of information during an academic exercise.
This includes, but is not limited to the following:
(1)Computer assignments must be done independently.
(2)Copying or allowing copying by another student or students constitutes cheating.
Multiple Submissions
The submission of substantial portions of the same academic work for credit more than once without authorization.
(1)Computer assignments must be done independently.
Abuse of Academic Materials
Intentionally or knowingly destroying, stealing, or making inaccessible library or other academic resources such as:
(1)Solution manuals.
(2)Instructor's overheads.
Complicity in Academic Dishonesty
Intentionally or knowingly helping or attempting to help another to commit an act of academic dishonesty
(1)Providing answer(s) to a later class.
(2)Asking other student(s) or class(es) for answer(s).
DISABILITY ACT:
If you have a disability, as defined by the American with Disability Act (ADA), which requires a classroom accommodation or auxiliary aid(s), please inform me of your needs during the first week of class so that I may take appropriate action. You should also notify the Office of Disabled Services Programs at 620-2769 concerning any needs you may have.
CLASSROOM PROTOCOL
Success in business requires much more than adequate technical training. Some of the factors that you should have developed by now include:
(1)dependability (e.g., attend class regularly)
(2)punctuality (e.g., class starts on time)
(3)courtesy (e.g., pay attention, don't pack up early)
(4)motivation (e.g., be adequately prepared for class)
POLICY ON LATE WITHDRAWALS
The University policy for dropping a course after the last official drop date is as follows:
UNF students are not allowed to drop a course after the official withdrawal date unless there are unusual circumstances that are clearly beyond the student's control. When such cases exist, the student should file a petition with attached documentation. The instructor does not approve or disapprove, but assigns a grade of WP or WF. The instructor may also recommend an action to be taken or write a note explaining unusual circumstances connected with the course. This policy means that students do not have the right to drop a course after the official university deadline simply because they have a passing grade at that time.
CLASS PREPARATION
Homework and attendance are essential parts of the learning process. It is the student's responsibility to have read the assigned chapter(s) or cases before coming to class. Assignments should be prepared and are due on the dates indicated on the schedule unless otherwise instructed. You should spend at least ten to fifteen hours per week outside of class on assignments.
ATTENDANCE/PARTICIPATION
Even though no roll will be called, attendance is important in achieving good grades. Students are responsible for thorough preparation of all cases.
Students will be called upon randomly to answer and help present problems.
WRITTEN COMMUNICATION REQUIREMENT:
INDIVIDUAL CASES
The case method presents real world situations as closely as possible to the manner in which a manager would face them. Unlike the usual problems in textbooks, cases are longer, provide more information on the companies represented, and present many of the uncertainties facing decision-makers in an actual situation. You will seldom know what the answer is or should be. Rather, you can only identify what you perceive to be the problem(s), analyze alternative solutions, and select the approach most appropriate for the particular set of facts in the case. You should concentrate on the problem but only after a thorough analysis of the facts. Great significance will be placed on (1) your ability to reach sound decisions that are consistent with your analysis and (2) your ability to communicate your analysis in an effective manner. Questions at the back of each case are directed towards this end. Before answering each question, the case problem must be stated with a listing of any constraints and a brief background of the case.
Project--refer to the reserve listing
This case involves a fundamental analysis of Mark X Company (A). You will analyze the last three years of data for the company. You will include as a minimum, balance sheets, income statements, common-size statements, sources and uses statement, ratio analysis (both trend and industry). An oral presentation on this case will be possible upon completion at discretion of the instructor.
(a)After the completion of Chapter 3 (see schedule for date), you will hand in, (1) income statements, (2) balance sheets, (3) common-size statements, (4) cash flow statements, and (5) ratio analysis for the last 3 years. See Robert Morris Associates industry ratios. You will calculate at the very least the ratios included in the Robert Morris ratios. Note that industry percentages for the common size statements are provided on RMA.
An interpretation of the ratios (both trend and industry) must be provided. This analysis will integrate the ratios and common size statements. In addition, the common-size statements and cash-flow statements must be analyzed.
ORAL COMMUNICATION REQUIREMENT:
An oral presentation on the analysis of one set of ratios (to be announced) will be given after Chapter 3 (See schedule for date).
(b)After handing in the historical analysis (see schedule for date), you will hand in (1) projected (forecasted) balance sheets, (2) income statements, (3) cash flow statements, and (4) common-size statements. Your assumptions must be clearly stated. Projection should be for 3 years.
In addition, projected ratios from the projected balance and income statements will be calculated. These will be checked against current industry ratios. Any areas of concern in the historical analysis may be addressed and corrected in the forecasted activity of the firms. However, this correction must be done in a reasonable manner.
GRADING OF PROJECT
Each segment will have a numeric grade.
If the case is done in teams, each member of the group will evaluate the other members of the group. Your individual grade will depend upon your group's evaluation of your efforts and contributions. For every 2 points below the highest individual's average score, 10% will deducted from the grade of the project.
i.e.:
Highest individual average score:9
Your average:5 (4 points below group average of 9)
Team's Project grade:90/100
Your grade:90(.8) = 72
Quizzes
There will be quizzes throughout the semester, both announced and unannounced. They will be on lectured topics or the class case.
Absolutely no makeup quizzes will be given. If the quiz is announced and you must be out of town, you will need to coordinate taking the quiz prior to your departure. The top five scores count toward the final grade.
Cases:
The assigned five cases must be completed outside of class for class participation. The class schedule indicates the lecture material that will be discussed and the cases assigned. Students will be called upon at random in class to discuss the case. If a student is unprepared for a case they will lose a maximum of 10 points per case from the participation points. In addition, two of the five cases must be written and handed into the instructor. The written case must be handed in at the start of the period the day the case is covered in class. The written cases are worth ten points each.
EXAMINATIONS:
There will be three hourly tests If an hourly is added the percentages will be adjusted accordingly. The last hourly may be comprehensive. If you do have to miss a test, clear it with the professor PRIOR(PRIOR DOES NOT MEAN AN HOUR BEFORE) to the exam. Exams may be taken early but as a general case NO MAKE-UP's are given. Exams are to remain in control of the professor. FAILURE TO RETURN AN EXAM RESULTS IN AN AUTOMATIC ZERO FOR THAT TEST.
FORMULA SHEETS
Formula sheets may be used during quizzes and tests. Only the formula may be written on a sheet of paper. Examples or directions on how to use the formula cannot be on the sheet.
GRADING
Project 200 points
Test 1100 points
Test 2100 points
Final100 points
Cases
Participation30 points
Written (2 of the 5)20 points
Quizzes (Top five) 50 points
TOTAL600 points
Percentage
A90-100%
B80-89%
C70-79%
D60-69%
F0-59%
A student must have earned at least 90% of the total possible course points (maximum 100) to obtain an 'A' for the course. Similar requirements for letter grades, B, C, and D are indicated on the schedule above. Although, quite often the final grades are curved, this is not a certainty. Therefore, the most conservative approach will be to use the above percentages for grading during the semester.
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FIN 5405 - ESSENTIALS OF MANAGERIAL FINANCE - CLASS SCHEDULE Fall 1998
Lecture Assignments / Textbook / Assignments / Case/QuizText / Problems
Introduction/
Orientation / Chapters 1,2 / 2-8 through 2-15
Financial Environment / 3
Moyer 3 / 3-5, 3-7 through 3-15
Moyer 3: 6, 18,23 / Project: Mark X Company (A)
Financial Environment/ Statement Analysis
Statement Analysis
Statement Analysis / Quiz (1,2,3)
In Class Work on Project
BE Analysis/ Financial & Operating Leverage / 4 / 4-8 through 4-13
Project Work / Quiz (4)
Oral Presentation on Ratios
Financial & Operating Leverage
Risk and Return / 5
Moyer 5 / 5-4 through 5-11
Moyer 5: 2,6,7
17,25,32
Risk and Return / Quiz (5)
Case: Peach Tree (A) Securities Inc.
Discounted Cash Flow / 6
Moyer 4 / 6-6 through 6-31
Moyer 4: 20, 35,36,43,47
Discounted Cash Flow
Case: Davis Michaels & Co
Project: Historical Analysis Due
Discounted Cash Flow/Bond and Stock Valuation / 7,18,19
Moyer 6,7 / 7-12 through 7-22
Moyer 6:4,8,11,14
Moyer 7: 2,4,6,10 / Quiz (6)
Discounted Cash Flow/Bond and Stock Valuation / 7,18,19 / 7-12 through 7-22 / Quiz (7,18,19)
Case: Peach Tree (B) Securities Inc.
Test (1-7)
Capital Budgeting Techniques / 13
Moyer 9 / 13-5 through 13-12 Moyer 9:
9,10,15,21
Case: Cranfield Inc A
Projected Cash Flows/Risk / 14
Moyer 8 / 14-4 through 14-12
Moyer 8: 11, 12,15,22 / Quiz (13)
Project: Forecast Due
Cost of Capital / 15
Moyer 11 / 15-7 through 15-19
Moyer11: 12, 14,15,16 / Quiz (14)
Cost of Capital
Test (13-15)
Capital Structure / 16 / 16-1 through 16-5 / Quiz (15)
Dividend Policy / 17 / 17-3 through 17-7 / Quiz (16)
Working Capital / 8
Moyer 15 / 8-1 through 8-7
Moyer15: 9,12
Cash & Marketable
Securities / 9, 9-A / 9-1 through 9-7
9A-1
Cash & Marketable
Securities/Credit Management / 9, 9-A
10
Moyer 16, 17 / 9-1 through 9-7
9A-1
10-1 through 10-7
Moyer 16:3, 6,15,17,18
Moyer 17: 20,21 / Case: Office Mates, Inc.
Credit Management/ Inventory / 10
11
Moyer 16, 17 / 10-1 through 10-7
11-1 through 11-6
Moyer 16:3, 6,15,17,18
Moyer 17: 20,21 / Quiz (8,9,10)
Inventory
Short-Term Financing/
Multinational Managerial Finance Issues / 12, 21 / 12-1 through 12-15 / Quiz (10,11)
Final (7:30-9:20)
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LIBRARY ASSIGNMENTS/ RESERVE LISTING
Course: Fin 5405
Text: Essentials of Managerial Finance [ ]
Exam for Fin 5405 [702]
Class Notes[2404]
Garden State Container Corporation-historical analysis [2767}
Historical Analysis --Garden State [2809]
Coca-Cola and Cadbury-Schweppes: 5-Year Forecast and Ratio Analysis[1932]
Essentials of Managerial Finance--Solutions to Problems [2299]
Course: Fin 3483
Text: Contemporary Financial Management [3047]
Text Question Answers and Problems: Instructor's Resource Manual [3048]
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