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Corporate Finance

On campus
Corporate Finance
Layer overview of Financial system and Financial markets

Overview

24 – 27 June 2019

Do you want to apply the time value of money principle in complex financial decisions and make capital budgeting decisions using various investment decision rules? Joining in the Corporate Finance course will provide knowledge and understanding of basic tools needed to successfully complete more advance finance courses.

Course delivery

Prof. François Belot

Associate professor of Finance – University of Cergy-Pontoise

Profile

François Belot is an associate professor of Finance at the University of Cergy-Pontoise. He earned his PhD from Paris-Dauphine University. His main research interests include the board of directors, family ownership, control enhancing mechanisms (such as shareholder agreements or double voting shares), mergers and acquisitions, CEO/CFO demographics and their impact on corporate decision making, and executive compensation. His research has appeared in various prestigious finance and management journals such as the Journal of Financial Economics, the Journal of Business Ethics, and the Journal of Small Business Management. He is also the head of the Master of financial engineering (CMI Ingénierie Financière) at the University of Cergy-Pontoise. Before joining academia, he worked as a buy-side financial analyst for an asset management company (in Paris).

Syllabus

This course is an introduction to the principles of corporate finance. Major topics include: financial statement analysis, the time value of money, risk and return, corporate decision making (investment decision, capital structure choice).

Objectives And Skills Targeted

The aim of this module is to provide knowledge and understanding of theory and practice of corporate finance. This course represents the foundation of finance theory and thus provides students with the basic tools needed to successfully complete more advanced (corporate) finance courses (corporate valuation, capital structure and its impact on business valuation, theory of corporate finance, etc.). By the end of this course, students will be able to:
(1) apply the time value of money principle in complex financial decisions,
(2) make capital budgeting decisions using various investment decision rules,
(3) understand capital structure choice and compute the cost of capital.

Method / Bibliography

There are number of excellent textbooks for an introductory course in Corporate finance. Students can primarily rely on the following:

  • « Fundamentals of Corporate Finance (3rd or 4th Edition) » by Berk, DeMarzo, and Harford. [Pearson Education]
  • « Fundamentals of Corporate Finance (10th, 11th, or 12th edition) », by Ross, Westerfield, and Jordan. [McGraw Hill Education]
  • « Corporate Finance. Theory and Practice (5th edition) » by Quiry, Dallochio, Le Fur, Salvi, and Vernimmen. [Wiley]

Time schedule: 2/3 theory and 1/3 practice (various exercises, applications and case studies will be discussed during classes).

Content

1. Introduction: Corporate finance and the financial manager

2. Prerequisites

  • Time value of money: present value, future value, discounting
  • Financial statement analysis: An overview

3. Capital budgeting

  • Project analysis
  • Measuring investment returns
  • Incremental free cash-flows: opportunity costs, externalities, sunk costs

4. Investment decision rules

  • The net present value
  • Alternative decision rules
  • Mutually exclusive alternatives
  • The theory and practice of investment decision rules

5. Capital structure and the cost of capital

  • Debt and equity
  • Risk and return
  • The weighted average cost of capital (WACC)
  • Using the WACC to value a project