Effective: Late Fall 8-Week, 2018/2019

FINC 396: Corporate Finance

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  Course Description

Analysis of financial and accounting information and its impact on financial decision-making and profit planning. Topics include: financial planning and control tools, leverage and capital structure, investment banking, dividend policy, corporate restructuring, risk management and international financial management.

Prerequisites: ACCT 281; MATH 150 or MATH 170; FINC 350.

Proctored Exams: None



  Textbooks

As part of TruitionSM, students will receive their course materials automatically as described below.

Required

  •  Zutter, C.J. and Smart, S.B.. Principles of Managerial Finance. 15th ed, Pearson, 2019.  eText

Suggested Additional Reading: Wall Street Journal, Journal of Finance, Financial Management, The Journal of Finance and Quantitative Analysis, other financial journals as desired.

Bookstore Information

Visit https://www.ccis.edu/bookstore.aspx for details.

eText Information

If a course uses an eText, (see Textbook information above) the book will be available directly in Desire2Learn (D2L) and through the VitalSource eText reader the Friday before the session begins, if registered for courses prior to that date.  Students will have a VitalSource account created for them using their CougarMail email address. Upon first login to VitalSource, students may need to verify their account and update their VitalSource password.  More information about how to use the VitalSource platform, including offline access to eTexts, can be found in D2L.  Students that would like to order an optional print-on-demand copy of eligible eTexts can do so through the VitalSource bookshelf at an additional cost.  Once orders are placed, it can take approximately five to seven business days for students to receive their print-on-demand books.

Physical Course Materials Information

Students enrolled in courses that require physical materials will receive these materials automatically at the address on file with Columbia College.  Delivery date of physical materials is dependent on registration date and shipping location.  Please refer to confirmation emails sent from Ed Map for more details on shipping status.

Note: Students who opt-out of having their books provided as part of TruitionSM are responsible for purchasing their own course materials.

  Course Overview

In this course we will analysis financial and accounting information and its impact on financial decision-making and profit planning. Some of the topics will include financial planning and control tools, leverage and capital structure, investment banking, dividend policy, corporate restructuring, risk management and international financial management. You will leave the course with an appreciation of corporate finance and a comprehensive overview of how corporate finance works and how corporate finance affects every aspect of business.  You will work individually and as teams throughout the course. Each week we'll focus on different situations, issues, or case studies encountered in the workplace through our online discussions; these are reinforced and expanded in readings in our text.

  Technology Requirements

Participation in this course will require the basic technology for all online classes at Columbia College:
  • A computer with reliable Internet access
  • A web browser
  • Acrobat Reader
  • Microsoft Office or another word processor such as Open Office

You can find more details about standard technical requirements for our courses on our site.

  Course Objectives

  • To introduce the subject of corporate financial management.
  • To identify factors that impact financial decision-making, implementation and evaluation.
  • To introduce the student to the planning and control tools of corporate finance.
  • To analyze leverage and its effect on optimal capital structure.
  • To describe the basic concepts of investment banking and the services investment bankers provide.
  • To investigate dividend policies and dividend-payment procedures.
  • To explore mergers and other forms of corporate restructuring, including bankruptcy.
  • To describe the types of risks that can adversely affect a firm's cash flows and explain how a firm might choose to hedge those risks.
  • To list the types of risks that multinational corporations face when they conduct business in different countries and currencies.

  Measurable Learning Outcomes

  • Describe and explain why conflicts of interest may arise in large organizations and dicuss how corporations can provide incentives for everyone to work toward a common end.
  • Describe and explain key measures of firm performance such as market value added and economic value added.
  • Estimate valuation of a company using the free cash flow approach.
  • Describe and explain the potential problems that can arise when management of the corporation and ownership are separate (i.e., the agency problem).
  • Describe and explain corporate governance and the underlying issues of social responsibility.
  • Explain the impact of growth on the firm's balance sheet and the role of the sustainable growth model as a planning device.
  • Describe the cash conversion cycle, the firm's objectives with regard to it, and the actions the firm can use to accomplish these objectives.
  • Explain the role of pro forma financial statements in the financial planning process.
  • Explain the role of the cash budget in planning and monitoring the firm's cash inflows and outflows.
  • Explain the key concerns of the financial manager with regard to managing inventory and accounts receivable.
  • Describe and explain the purpose and makeup of financial markets and institutions.
  • Describe the major classes of securities issued by firms to raise capital.
  • Explain the basic choices that corporations face in raising long-term financing.
  • Describe the costs and benefits of raising long-term funds by issuing securities in the capital market.
  • Describe the basic issuance and pricing pattern observed in the initial public offerings (IPO) market and the seasoned equity offerings market.
  • Describe and explain the implications of market efficiency for a firm's financial decisions.
  • Summarize recent trends in the use made by firms of different sources of capital.
  • Describe and explain how firms' make initial public offerings and the costs of such offerings.
  • Explain the role of the underwriter in an issue of securities.
  • Explain how financial leverage increases both a firm's risk and its returns.
  • Describe and explain operating leverage and financial leverage, and the potential effect each had on a firm's cost of capital.
  • Explain how corporate and personal taxes affect capital structure decisions.
  • Analyze the effect of debt financing on the risk and required return of equity holders.
  • Explain how the costs of bankruptcy and financial distress affect capital structure decisions.
  • Explain the fundamentals of dividends, including payment procedures, types of policies and other forms of dividends.
  • Describe how dividends are paid and how companies decide on dividend payments.
  • Describe the most important characteristics of long-term debt financing, such as the factors that influence its cost and the covenants lenders include to protect their investments.
  • Explain how a corporation decides whether to refund an existing bond issue by exercising a call option.
  • Explain the difference between operating leases and capital, or financial leases.
  • Describe the steps involved in deciding whether to purchase an asset through a lease or by borrowing the money required to purchase the asset.
  • Explain how companies can use options, futures, and forward contracts to reduce risk.
  • Explain how companies can use swaps to change the risk of securities that they have issued.
  • Describe the difference between fixed and floating exchange rates.
  • Describe ways that companies change their ownership or management.
  • Explain why it may make sense for companies to merge and the gains and costs to the acquiring firm.
  • Describe takeover defenses.

  Grading

Grading Scale

Grade Points Percent
A 900-1000 90-100%
B 800-899 80-89%
C 700-799 70-79%
D 600-699 60-69%
F 0-599 0-59%

Grade Weights

Assignment Category Points Percent
Discussion 200 20%
Weekly Quizzes 400 40%
Annual Report Project 200 20%
Homework Problems 200 20%
Total 1000 100%

  Schedule of Due Dates

Week 1

Assignment Points Due
Discussion 1 25 Wednesday/Sunday
Homework 1 25 Sunday
Quiz 1 50

Week 2

Assignment Points Due
Discussion 2 25 Wednesday/Sunday
Homework 2 25 Sunday
Quiz 2 50

Week 3

Assignment Points Due
Discussion 3 25 Wednesday/Sunday
Homework 3 25 Sunday
Quiz 3 50

Week 4

Assignment Points Due
Discussion 4 25 Wednesday/Sunday
Homework 4 25 Sunday
Quiz 4 50

Week 5

Assignment Points Due
Discussion 5 25 Wednesday/Sunday
Homework 5 25 Sunday
Quiz 5 50

Week 6

Assignment Points Due
Discussion 6 25 Wednesday/Sunday
Homework 6 25 Sunday
Quiz 6 50

Week 7

Assignment Points Due
Discussion 7 25 Wednesday/Sunday
Homework 7 25 Sunday
Quiz 7 50

Week 8

Assignment Points Due
Discussion 8 25 Wednesday/Saturday
Homework 8 25 Saturday
Quiz 2 50
Annual Report Project 200
Total Points: 1000

  Assignment Overview

Annual Report Project

You will write a thorough analysis of a company’s annual report for this class.  The report should include an analysis of the types of transactions and events that affect the company, the company’s accounting choices, trends in profitability, and a balance sheet analysis.  You will find a more detailed description of the assignment and a sample paper in the course Content.  This assignment is due by Saturday of Week 8. 

Discussion

In order to get full credit for discussions you must post 3 good quality posts every week. Your first post should be posted by Wednesday; your responses to classmates should be submitted by Sunday. Posts such as "I agree…" or "Good post..…" will not get any credit. Your posts should add value to overall discussions. Further, keep in mind the netetiquette while responding to others' posts. Be polite to others, even if you disagree with them.  

Homework Assignments

There will be a homework assignment every week, using end of the chapter problems. Solve the problems and submit the assignments in MS WORD or EXCEL format through the Dropbox. The instructor will grade the assignments and return with my feedback within 72 hours. It is recommended that you do the home work assignment before taking the quiz for the week.

Quizzes

There will be 8 quizzes, one per week. Each quiz is worth 50 points. The quiz is over the chapters assigned for the week. You need to read the assigned chapters  and complete homework assignment in order to prepare for the quizzes. All the quizzes are graded immediately by the system. The quizzes are usually from 10 to 20 questions. Quizzes should be completed by midnight Sunday of the week assigned, except for Week 8, when the quiz is due on Saturday. You will have two hours to complete each quiz. They should be completed in the Quizzes area of the course.

  Course Outline

Click on each week to view details about the activities scheduled for that week.

Readings
Chapters 1-2
Discussion 1

Do some research online about Berkshire Hathway series A (symbol BRK.A).  What is the current stock price of Berkshire Hathway series A? What is its P/E ratio? Does it pay a dividend? Who is its CEO? What were the latest earnings per share? How does the financial performance of Berkshire Hathway compare to its competitors? What is its stock symbol? What stock exchange does it trade on? Please add any other financial information you would like to share about Berkshire Hathway series A.

Homework 1

Chapter 1, pages 39, problems P1-7, P1-10, P1-11.*
Chapter 2, pages 72-73, problems P2-1, P2-4.

IMPORTANT: For Chapter 1, Problems 1-7 and 1-11, use the Corporate Tax Rate Schedule shown the Activities tab of Week 1's Instructional Materials instead of Table 1.2 (2018 Tax Rate Schedule for Single Taxpayer) on Page #24 of your eText. The publisher is working to correct this mistake.

Quiz 1
Please go to the Quizzes area of the course and take the quiz over Chapters 1-2
Annual Report Project

Begin thinking about what company you are interested in doing an annual report analysis on. Please send the instructor an email by the end of next week with the name of the company. 

Readings

Chapters 3-5

Discussion 2
Where did the Dow 30 (DOW Industrials), the S&P 500, the NASDAQ, the Russell 2000 and the stock you chose for your annual report project close today? (Choose any day, Monday – Wednesday of this week). What has been the trend for each of the last week, month, quarter, year? Please feel free to expand on your answers and search the Internet for supporting information.
Homework 2

Chapter 3, pages 128-130 problems P3-7, P3-9, P3-14
Chapter 5, pages 235 – 242, problems P5-5, P5-9, P5-12, P5-18, P5-22, P5-23, P5-25, P5-27, P5-34.

Quiz 2
Please go to the Quizzes area of the course and take the quiz over Chapters 3-5.
Readings

Chapters 6-7

Discussion 3

Why are bonds so sensitive to Interest rates? Do a Google search to find out a recent bond issue and discuss its features.

What are some of the tools used to determine stock valuations? Are these tools keeping up with today's new dot.com companies? Do they truly reflect the values of these companies? Are the company's common stocks today reflective of their true values? How does this affect your decision-making process? Feel free to expand on your answer.

Homework 3

Chapter 6, pages 301-303, problems P6-15, P6-19, P6-22, P6-24.
Chapter 7, pages 335-337, problems  P7-5, P7-10, P7-11, P7-14.

Quiz 3
Please go to the Quizzes area of the course and take the quiz over Chapters 6-7.
Annual Report Project
You should have received and reviewed the financial statements needed to start your Annual Report Project, due Week 8.  
Readings

Chapters 8-9

Discussion 4

What is the Capital Asset Pricing Model (CAPM)? Explain each variable in CAPM. What is the Security Market Line (SML)? Please feel free to expand on your answers.

Homework 4

Chapter 8, pages 382-393, problems P8-1, P8-3, P8-9, P8-13, P8-15, P8-21, P8-24, P8-27.
Chapter 9, pages 420-422, problems P9-3, P9-7, P9-9, P9-14.

Quiz 4
Please go to the Quizzes area of the course and take the quiz over Chapters 8-9.
Readings

Chapters 10-12

Discussion 5

Which capital budgeting technique is better--NPV or IRR? Is the assumption of reinvestment of cash inflow beneficial for NPV or IRR? Which technique is preferred in real practice and why? Feel free to expand on your answers.

Homework 5

Chapter 10, pages 461-465, problems P10-5, P10-16, P10-21.
Chapter 11, pages 459-461, problems P11-12, P11-16. 

Quiz 5
Please go to the Quizzes area of the course and take the quiz over Chapters 10, 11 and 12.
Readings

Chapters 13-14

Discussion 6

What is operating, financial, and total leverage, and what is the relationship among them?

What is the theory of capital structure suggested by Modigliani and Miller in 1958 for which they received Nobel Prize? Do you think this theory is still valid? 

Lastly, what is the residual theory of dividends and the key arguments with regard to dividend irrelevance and the relevance?

Homework 6

Chapter 13, pages 595-600, problems P13-5, P13-9, P13-12, P13-12, P13-19, P13-22.
Chapter 14, pages 637-639, problems P14-9, P14-12, P14-14.

Quiz 6
Please go to the Quizzes area of the course and take the quiz over Chapter 13-14.
Course Evaluation
Please evaluate the course. You will have an opportunity to evaluate the course near the end of the session. A link sent to your CougarMail will allow you to access the evaluation. Please note that these evaluations are provided so that I can improve the course, find out what students perceive to be its strengths and weaknesses, and in general assess the success of the course. Please do take the time to fill this out.
Readings

Chapters 15-16

Discussion 7

What is the importance of cash for a business? Can a company be profitable but cash poor? What is a cash conversion cycle? If possible, find the cash situation of the company you are working on for your project and bring this into the conversation. Feel free to expand on your answer.

Homework 7

Chapter 15, pages 684-685, problems P15-5, P15-8.
Chapter 16, pages 717-720, problems P16-9, P16-16, P16-18.

Quiz 7
Please go to the Quizzes area of the course and take the quiz over Chapter 15-16.
Annual Report Project
You should at this point be prepared to submit your Annual Report Project next week.
Readings

Chapters 17-19

Discussion 8

History has shown that buying internationally will lower your risk and improve your return over the long run. Where might you put money internationally and how? Additionally, what are American Depository Receipts (ADRs)?

Homework 8

Chapter 17, pages 758-763, problems P17-5,P17-10,P17-22.
Chapter 18, pages 802-804, problems P18-2, P18-5, P18-7.
Chapter 19, page 844, problems P19-2, P19-3.

Quiz 2
Please go to the Quizzes area of the course and take the quiz over Chapter 17-19.
Annual Report Project
Your Annual Report Project is due. Please submit it to the appropriate folder in the Dropbox area of the course.  

  Course Policies

Student Conduct

All Columbia College students, whether enrolled in a land-based or online course, are responsible for behaving in a manner consistent with Columbia College's Student Conduct Code and Acceptable Use Policy. Students violating these policies will be referred to the office of Student Affairs and/or the office of Academic Affairs for possible disciplinary action. The Student Code of Conduct and the Computer Use Policy for students can be found in the Columbia College Student Handbook. The Handbook is available online; you can also obtain a copy by calling the Student Affairs office (Campus Life) at 573-875-7400. The teacher maintains the right to manage a positive learning environment, and all students must adhere to the conventions of online etiquette.

Plagiarism and Academic Integrity

Academic integrity is a cumulative process that begins with the first college learning opportunity. Students are responsible for knowing the Academic Integrity policy and procedures and may not use ignorance of either as an excuse for academic misconduct. Columbia College recognizes that the vast majority of students at Columbia College maintain high ethical academic standards; however, failure to abide by the prohibitions listed herein is considered academic misconduct and may result in disciplinary action, a failing grade on the assignment, and/or a grade of "F" for the course.

Additionally, all required papers may be submitted for textual similarity review to Turnitin.com for the detection of plagiarism. All submitted papers may be included in the Turnitin.com reference database for the purpose of detecting plagiarism. This service is subject to the Terms and Conditions of Use posted on the Turnitin.com site.

Non-Discrimination

There will be no discrimination on the basis of sex, race, color, national origin, sexual orientation, religion, ideology, political affiliation, veteran status, age, physical handicap, or marital status.

Student Accessibility Resources

Columbia College is committed to creating a learning environment that meets the needs of its diverse student body. If you anticipate or experience any barriers to learning, communicate your concerns with the instructor. In addition to speaking with the instructor, the following resources are available to ensure an opportunity to learn in an inclusive environment that values mutual respect.

  • For students with disabilities/conditions who are experiencing barriers to learning or assessment, contact the Student Accessibility Resources office at (573) 875-7626 or sar@ccis.edu to discuss a range of options to removing barriers in the course, including accommodations.
  • For students who are experiencing conflict which is impacting their educational environment, contact the Office of Student Conduct at studentconduct@ccis.edu or (573) 875-7877.
  • For students who have concerns related to discrimination or harassment based on sex, gender identity, sexual orientation, pregnancy or parental status, please contact the Title IX Office at titleixcoordinator@ccis.edu. More information can be found at http://www.ccis.edu/policies/notice-of-non-discrimination-and-equal-opportunity.aspx

Online Participation

You are expected to read the assigned texts and participate in the discussions and other course activities each week. Assignments should be posted by the due dates stated on the grading schedule in your syllabus. If an emergency arises that prevents you from participating in class, please let your instructor know as soon as possible.

Attendance Policy

Attendance for a week will be counted as having submitted any assigned activity for which points are earned. Attendance for the week is based upon the date work is submitted. A class week is defined as the period of time between Monday and Sunday (except for week 8, when the work and the course will end on Saturday at midnight.) The course and system deadlines are based on the Central Time Zone.

Cougar Email

All students are provided a CougarMail account when they enroll in classes at Columbia College. You are responsible for monitoring email from that account for important messages from the College and from your instructor. You may forward your Cougar email account to another account; however, the College cannot be held responsible for breaches in security or service interruptions with other email providers.

Students should use email for private messages to the instructor and other students. The class discussions are for public messages so the class members can each see what others have to say about any given topic and respond.

Late Assignment Policy

An online class requires regular participation and a commitment to your instructor and your classmates to regularly engage in the reading, discussion and writing assignments. Although most of the online communication for this course is asynchronous, you must be able to commit to the schedule of work for the class for the next eight weeks. You must keep up with the schedule of reading and writing to successfully complete the class.

No late discussion posts will be accepted.

All assignments must be completed and successfully submitted by the due date. If an assignment is not submitted by the due date, and you don’t have permission from the instructor for an extension, you will get a (0) for that assignment. No late assignments will be accepted without instructor approval. This applies to all assignments. 

Course Evaluation

You will have an opportunity to evaluate the course near the end of the session. A link will be sent to your CougarMail that will allow you to access the evaluation. Be assured that the evaluations are anonymous and that your instructor will not be able to see them until after final grades are submitted.

  Additional Resources

Orientation for New Students

This course is offered online, using course management software provided by Desire2Learn and Columbia College. The course user guide provides details about taking an online course at Columbia College. You may also want to visit the course demonstration to view a sample course before this one opens.

Technical Support

If you have problems accessing the course or posting your assignments, contact your instructor, the Columbia College Technology Solutions Center, or the D2L Helpdesk for assistance. If you have technical problems with the VitalSource eText reader, please contact VitalSource. Contact information is also available within the online course environment.

Online Tutoring

Smarthinking is a free online tutoring service available to all Columbia College students. Smarthinking provides real-time online tutoring and homework help for Math, English, and Writing. Smarthinking also provides access to live tutorials in writing and math, as well as a full range of study resources, including writing manuals, sample problems, and study skills manuals. You can access the service from wherever you have a connection to the Internet. I encourage you to take advantage of this free service provided by the college.

Access Smarthinking through CougarTrack under Students -> Academics -> Academic Resources.