Dorla A. Evans, Ph.D.
Finance 431/531
Short-term Capital Management
Fall 2002
Administrative Information:
Office: ASB 323, Phone: 824-6764,
Hours: MW 1-3:30 p.m., and by appointment
Web Site: Personal --
Course --
Objectives:
The purpose of the course is to demonstrate the application of the important financial concepts taught in Principles of Finance to short-term corporate financial decisions. The course will focus on financial policies concerning cash, marketable securities, accounts receivable, inventory, and short-term borrowing. Quick and unchallenged changes in the levels of these assets and liabilities will change the firm’s liquidity, potentially affecting the firm’s survival.
Teaching Approach:
The format of the class will consist mainly of lectures and class discussion. Because the course is so quantitative in nature, we will often devote class time to "hands-on" problem solving.
I will assign homework problems to assist in your understanding of the material. Although I will not collect or grade the homework, it is essential if you wish to thoroughly understand the material and earn a good grade in the course.
It is imperative you have a strong working knowledge of college algebra, and know how to read and construct graphs, tables, and charts. If you are rusty, you will need to catch up as soon as possible.
Texts:
Required materials are (1) Short-term Financial Management, 2nd edition, Terry S. Maness and John T. Zietlow, South-Western, 2002; (2) my lecture notes available on the Web-CT web site; (3) in-class tasks; and (4) my tutorial on conducting and communicating good financial analyses. Bring a financial calculator, the course notes, and in-class tasks with you to every class meeting. At the library on reserve you will find the Solutions Manual to the textbook problems.
Prerequisites:
Upper-division or graduate standing and FIN 301
Ethics:
As in all your classes with me, I expect the highest ethical behavior. You may not work together on the take-home exams. If you are in doubt about anything, please ask me.
Grade and Testing Policies:
Your course grade will be based upon two in-class mid-term examinations, a final comprehensive examination, and two take-home exams. The in-class exams will contain short essays and problems.
Your grade will be determined according to the following percentages:
Undergraduate / GraduateTake-home Exams / 20% / 15%
Exam 1 / 25% / 20%
Exam 2 / 25% / 20%
Final Exam / 30% / 25%
Comprehensive Project / 20%
Total / 100% / 100%
Take-home exams: The take-home exams are short tasks which must be completed with a computerized spreadsheet and submitted with a cover memorandum. Both style and content are important. You will find a tutorial on conducting and communicating good financial analyses on my website. Included are a copy of my style requirements and my grading approach. Both take-home exams are to be completed without help from any other person, in or out of the class.
Projects: In addition to the undergraduate projects, graduate students will prepare an approved research project which requires integration of the course materials.
In-class exams: The exams will test your understanding of financial concepts and quantitative tools, not your ability to memorize. I usually focus on the big issues, not tiny details. You are responsible for all assigned material in the text and material covered in class. I don’t grade homework, but experience tells me it is absolutely essential for you to do some or all of the homework to perform well on exams. I promise exam questions will come from some variation of the tasks we complete in class and the homework assigned below. Ignore this promise at your peril!
Course Policies:
Course grades are based upon an average of all your scores in the course. If you inform me in advance that you have to legitimately miss an exam, I will substitute your final exam grade for the missed exam. Please don’t ask for an exception to this policy. Although I sympathize with your personal problems, I cannot give consideration to one person without being unfair to others.
Getting Started with WebCT:
The Internet course materials reside in software called WebCT. WebCT is a software package professors use to simplify their putting courses on the Internet. You will be accessing the software to view course materials and communicate with the professor or fellow classmates, etc. Go to the web site for the course:
Click on the link: Student Login Instructions. It will tell you how to determine your user i.d. and password. Follow the instructions for accessing the WebCT server. NOTE: You will be using Version 3.5 of WebCT. If you have problems logging on, please get assistance from me or a fellow student.
Homework Assignments:
Homework will not be graded. You are responsible for working the problems as we cover the material. Problems worked in class are not sufficient to prepare you for exams. A copy of the solutions to the problems is available on reserve at the library. See me if you need help understanding the solution.
Competency in working these problems does not ensure good performance on exams, as you must be able to interpret the results and understand why you have applied a particular analytical framework.
Chapter / Homework Assignment (Q=Question; P=Problem)1 / Q 1, 2, 5,6,7,9, 10; P 3, 4
2 / Q 1-3, 6, 8; P 2, 3
3 / Q 4, 5; P 2, 5, 6, 8
4 / Q 2, 9, 12; P 1, 3, 9
5 / Q 1, 8, 9, 11; P 1, 3
6 / Q 1, 3, 4, 5, 6; P 1, 2, 6
7 / Q 2-4, 7, 8; P 1, 3, 4
8 / Q 1, 2, 5, 6, 8, 13, 16, 18, 23; P 1, 3, 4
9 / Q 1-5, 7; P 1, 2, 3
10 / Q 1-6; P 1, 2, 3, 5
11,19 / Ch.11 Q 1, 3, 8, 9; P 1, 3; Ch.19 Q 2, 3, 6
12 and Appendices / Q 1, 5, 7; P 1-3; Appendix 12A: P A-1, A-2; Appendix 12B: Q B-1, B-3, B-4, B-5, B-6; P B-1, B-2, B-3
15 and Appendix / Q 1, 2, 5, 17; Appendix Q A-1, A-2, A-3, A-6, A-7; Appendix P A-1, A-3, A-5
16 / Q 1-4, 6; P 1, 2, 5, 6
Finance 431/531 -- Short-term Capital Management
Fall 2002
Class Schedule
# Classes / Date / Chapter / Topic2 / 8/21-8/23* / 1 / Introduction to FIN 431 and Role of Working Capital
3 / 8/26-8/30 / 2 / Analysis of Solvency, Liquidity and Financial Flexibility
9/2 / -- / Holiday!
2 / 9/4-9/6 / 3 / Valuation
2 / 9/9-9/11 / 4 / Inventory Management
2 / 9/13-9/16 / 5 / Accounts Receivable Management
3 / 9/18-9/23 / 6 / Credit Policy and Collections
2 / 9/25-9/27 / 7 / Managing Payables and Accruals
2 / 9/30; 10/2 / -- / Examination 1; Return Exams
10/4 / -- / Fall Break!
3 / 10/7-10/11 / 8 / The Payment System and Financial Institution Relationships
3 / 10/14-10/18 / 9 / Cash Collection System
3 / 10/21-10/25 / 10 / Cash Concentration
3 / 10/28-11/1 / 11,19 / Cash Disbursement System
2 / 11/4;11/6 / -- / Examination 2; Return Exams
5 / 11/8-11/18 / 12 / Cash Forecasting
2 / 11/20-11/22 / 15 / Short-term Investment Management
2 / 11/25, 12/2 / 16 / Short-term Financing
11/27-11/29 / -- / Thanksgiving!
12/9 / -- / Final Examination, 8 to 10:30 a.m.
* On August 23 I will be unable to hold class. There will be an assignment for that day.
Code of Classroom Etiquette
I am establishing this Code of Classroom Etiquette for the duration of the semester.
Classroom Etiquette
This Code of Classroom Etiquette is established to foster appreciation for a classroom environment that enhances the learning experience for students and professor. Attention to the code will add value to the course by creating a more meaningful and constructive discussion. Students, therefore, are expected to demonstrate classroom etiquette based on the following principles:
I. Attendance:
Students are expected to attend every class throughout the term. Students should use mature judgment in determining whether they must miss class.
II. Punctuality
Students are expected to arrive for class on time so that the professor may start and end the class according to schedule. Students arriving late should be as quiet as possible and take a seat close to the door. A pattern of lateness will affect students’ final exam grade.
III. Exiting and Entering
Students are expected to remain in the classroom for the duration of the class. If a student must depart early due to unavoidable circumstances, the student should inform the instructor before class. Leaving and re-entering the class is not permitted except in the event of an emergency.
IV. Disruptive Behavior
Students should demonstrate respect for the professor and fellow students during the class period. Students, therefore, should refrain from distracting behavior such as disruptive eating, using laptops to surf the Web or check e-mail and holding side conversations.
V. Respect the Facilities
Students are expected to help maintain the appearance of the classroom. After class students should discard all trash.
In essence, the Code emphasizes respectful behavior in the classroom that contributes to the enhancement of the learning experience at the University of Alabama in Huntsville.