Course Name :  Managerial Finance

Degree: Postgraduate

Code

Year/Semester

Local Credits

ECTS Credits

Course Implementation, Hours/Week

Course

Tutorial

Laboratory

MTME 502

2016/Fall

3

6

3

3

0

Department

Maritime Transportation and Management Engineering

Instructors

Contact Information

Office Hours

Web page

www.pirireis.edu.tr

Course Type

 Selective

Course Language

English

Course Prerequisites

  -

Course Category by Content, %

Basic Sciences

Finance

Engineering Science

Humanities

10

60

30

Course Description

This course provides a perspective on the value creation framework in the context of private and public companies. It surveys all core aspects of financial management including investment, funding, and distribution decisions as well as implications for corporate governance and risk management. It covers the following: techniques of financial analysis and planning such as ratio analysis, pro forma projections and discounted cash flow analysis; domestic and international financial environments; the sources and uses of funds; problems of capital structure; capital budgeting and cost of capital; mergers and approaches to business valuation; international financial management. Prerequisite: Introductory accounting or equivalent.

Course Objectives

The Course Objectives of this subject are to provide students with:

1. Explain the financial goal governing a firm’s decisions.
2. Apply various valuation models to value long-term debt, preference shares and ordinary shares.
3. Explain the importance, role and techniques of capital budgeting in a firm.
4. Understand risk and return, diversifiable and non-diversifiable risk and asset pricing model.
5. The relationship between managerial finance and other functional areas of business.
6. Introduces value creation and how alternative financial institutions accomplish this.
7. Understand how to determine the cost of capital of a firm.
8. Explain operating and financial leverage, and implications for the target capital structure.
9. Discuss theories and issues related to dividend policy.
10. Use of corporate financial statements for investment and lending decisions; emphasis on financial analysis techniques, valuation, business analysis, cash flow projections, credit scoring, related research evidence.

Course Learning Outcomes

At completion of the course, students will be able to:

1. Use financial theory and its associated tools to analyze financial scenarios.
2. Make capital budgeting decisions based on theoretical principles.
3. Determine capital structures and other financial policies using CAPM and other tools.
4. Understand and apply risk, return, opportunity cost, and cost of capital concepts.
5. Identify the key principles of securities markets, futures & options and understand how each works.
6. Apply financial analysis concepts to mergers & acquisitions and international finance.

Instructional Methods and Techniques

Weekly classes are 3 hours long. I will use lectures, case discussions and overview of topical issues to create a rich learning environment in class. I will emphasize theory and analytics, but also teach the course from an applied perspective.

Tutorial Place

Class teaching.

Textbook

- Principles of Corporate Finance - Richard A. Brealey, Stewart C. Myers, Franklin Allen

Other References

1. Managerial Economics - Nick Wilkonson

2. Principles of Managerial Finance – Lawrence J. Gitman

Homework & Projects

Presentation

Best Preparation Method,

Laboratory & Class Work

The PowerPoint slides presented in class are the instructor’s notes, they should not serve as yours. You should invariably read the assigned chapters and supplementary materials before you come to the class and go over the assigned exercises and cases. After the end of each session, you should review handouts, your notes and highlights in your readings. I would strongly recommend you to review the end of chapter questions on a regular basis. I will provide the solutions for these questions.

Computer Use

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Other Expectations

Students are expected to carefully review the assigned reading materials before each session, diligently work on the assigned problems/questions and cases, and to participate actively in the class discussions. You should be prepared to spend significant time to digest the material, to work on the assignments and case studies. Timely submission of the assigned work is critical. Late submissions will not be accepted

Participation - This course will rely heavily on individual participation in class discussions.

Professionalism – Part of your course grade will be determined by your professionalism.

Attendance – Because this is a one term schedule class, the importance of attendance becomes even more critical.

Punctuality- Please make an effort to be in class on time to avoid disruptive effect of late arrivals.

Assessment Criteria NAVIGATIONAL TERMS AND DEFINITIONS AND TERRESTRIAL COORDINATE SYSTEM

Activities

Quantity

Effects on Grading, %

Attendance

Midterm

Quiz

Homework

Term Paper/Project Case Write Ups x 2 out of 5

1

30

Laboratory Work

Practices

Tutorial

Seminar

Presentation

1

10

Field Study

Final Exam

1

60

TOTAL

100

Effects of Midterm on Grading, %

40

Effects of Final on Grading, %

60

TOTAL

100

ECTS/

WORKLOAD TABLE

Activities

Count

Hours

Total

Workload

Lecture

14

3

42

Midterm

Quiz

Homework

Term Paper/Project

1

50

50

Laboratory Work

Practices

Tutorial

Seminar

Presentation

1

25

25

Field Study

Final Exam

1

50

50

Total Workload

157

Total Workload/25

157/25

Course ECTS Credits

6

Week

Topics

Course Outcomes

1

• Introduction of Managerial Finance

• What is managerial or corporate finance?
• How is (managerial / corporate) finance different from accounting?
• What are the different forms of business organization?
• What are the goals of corporate firms?
• The managerial finance function and its relationship to economics and accounting.

I

2

• What is Finance?

• Finance is concerned with decisions about money (Cash Flows)
• Finance decisions deal with how money is raised and used
• Financial Decision: affects the distribution of wealth between security holder. If new securities underpriced, new holders will obtain a bargain at the expense of existing holders.

II

3

• Goals and Governance of the Firm

• How to Calculate Present Values
• Future Values and Present Values
• Looking for Shortcuts—Perpetuities and Annuities
• The Link between Stock Price and Earnings per Share
• Net Present Value and Other Investment Criteria
• Making Investment Decisions with the Net Present Value Rule

I, II

4

• Financial Systems

• Financial Markets
• Financial Institutions
• Financial Instruments
• Capital Markets & Money Markets
• The relationship between financial institutions and markets and the role and operations of the money and capital.

II, III

5

• The Managerial Finance Functions

• Relationship to economics
• Accounting
• The primary activities of the financial manager
• The treasurer (the chief financial manager): Financial Activities, fund Raising, Managing Cash
• The controller ( the chief accountant): Tax management, Financial accounting, Cost accounting
• Foreign Exchange Manager- hedge or protect against such a loss

II, III, IV

6

• The Managerial Finance Functions

• Investment Decision
• Financing Decision
• Dividend Decision
• Working Capital Decision
• The financial View of the Firm
• The Role of the Financial Manager

III, IV,

7

• Financial Management

• Business Finance
• Corporate Finance
• Investment policy: How the firm spends its money (real and financial assets)
• Financing and payout policy: How the firm obtains funds (debt, equity, …) and disburses of excess cash
• What is agency cost and how does it impact financial decisions?
• The primary economic principle used in managerial finance is Marginal Analysis.

I, II, III, IV

8

• Value Maximization

• Limited liability , increasing market value
• Ease of raising capital , growth opportunities
• Ownership & Investors
• Wealth Maximization rather than profit maximization.

IV, V

9

• Business Plan

• Why a Business Plan?

• Strategic Guide
• Market Analysis
• Marketing and Sales Plan
• Research and development
• Management

V, VI

10

• Financial Statements

• Financial Statements, Taxes, and Ratios
• Three Major Financial Statements
• Economic Value Added (EVA)

VI

11

• Financial Theory - Financing Decisions and Market Efficiency

• What Is an Efficient Market?
• Behavioral Finance
• Financial Risk and Expected Returns
• The Weighted-Average Cost of Capital

V, VI

12

• Financial Risk Management

• Approaches to Risk Management
• Time Value of Money
• Risk and the Cost of Capital Financial Leverage
• Demand and Supply Elasticity

IV, V, VI

13

• Managing International Risk

• The Foreign Exchange Market
• Hedging Currency Risk
• Exchange Risk and International Investment
• Working Capital Management

V, VI

14

          Conclusion: What We Do and Do not Know about Finance

I, II, V, VI

Program Outcomes

Level of Contribution

1

2

3

a

Understand how to determine the cost of capital of a firm.

X

b

An  ability to design and conduct experiments, as well as to analyze and interpret data

X

c

Ability to Apply various valuation models to value long-term debt, preference shares and ordinary shares.

X

d

Ability to function on multi-disciplinary financing

X

e

An ability to identify, formulate, and solve financing problems

X

f

An understanding of professional and ethical responsibility

X

g

An ability to communicate effectively

X

h

Explain the importance, role and techniques of capital budgeting in a firm.

X

i

A recognition of the need for, and an ability to engage in life-long learning

X

j

A knowledge of contemporary issues

X

k

Understand risk and return, diversifiable and non-diversifiable risk and asset pricing model of Maritime Ind.

X

l

An ability to apply knowledge of mathematics, science, and finance

X

m

An ability to interpret and analysis of the data regarding managerial finance and operations, recognition and solution of problems for decision making process.

X