Brigham Chapter 15 Working Capital Management Solution to End Chapter Problems

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					                 UNIVERSITY OF NORTH CAROLINA AT GREENSBORO
                   BRYAN SCHOOL OF BUSINESS AND ECONOMICS

                                  MBA 605: Financial Management
                                        Course Syllabus
                                     Summer Semester 2004

Class Time       : W 6:00-9:20
Class Location   : 110 Bryan Building
Instructor       : Richard Flanagan
Office           : 423 Bryan
Phone            : 336.334.5658
E-mail           : rlflanag@uncg.edu (best bet!)
Office Hours     : Wednesday: 5:00p – 6:30p
                    By Appointment

Course Resources:
Corporate Finance: A Focused Approach. Ehrhardt and Brigham. 2003. (required)

Text web site (http://ehrhardt.swcollege.com)
Blackboard web site (http://blackboard.uncg.edu)

We will make extensive use of Microsoft Excel. If you do not have a personal computer or if you do not
have MS Excel installed on your computer, it is available on the University’s computer network.

The purchase of a financial calculator is not required but is strongly recommended. There are several
models that are useful. The text provides general instructions for most common financial calculators.

We will use considerable material that is provided by the text web site (URL listed above). Three key
items for each chapter are available from this web site – Tool Kit, Mini-Case, and Build A Case. These
are MS Excel files that either illustrate important concepts and calculations or support cases and problems
found at the end of each chapter.

Course Description:
Financial decision-making; financial markets, valuation of securities, capital budgeting, financial analysis,
working capital policy, and financing a firm’s operations.

Course and Learning Objectives:
This course seeks to provide an understanding of the financial manager’s role in obtaining capital,
managing funds, and monitoring and increasing the value of the corporation. MBA 605 is supported with
pragmatic analytical tools.

The concept of entity valuation is central to finance and MBA 605 provides the basis for understanding
the implications and ramifications of varied business strategies and tactics on firm value. This course
serves as the base for subsequent required and elective courses in Finance.

Specifically, these objectives will be accomplished by:
   • Provide understanding of the valuation of equity and debt claims, in particular the assessment of
        the risk characteristics of these types of securities;
   • Provide understanding of how valuation principles guide a firm’s investment decisions;
   • Provide an understanding of popular measures of management performance;
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    •   Understanding fundamental concepts such as the structure of interest rates including the cost of
        capital, the time value of money, the relationships between risk and return, financial statement
        review, and analysis and debt and equity valuation;
    •   Provide understanding of the analysis of financial statement information;
    •   Provide understanding of the valuation of business flexibility in the context of option valuation;
    •   Researching financial planning and forecasting as well as cash flow estimation.
    •   Developing a deeper understanding of the use of computer software (Excel) in its application to
        financial management.

Course Organization:
In general, material in this course will be discussed by a combination of lecture, demonstration and case
study. Lectures will focus on an overview of the subject matter and in-depth discussions of more difficult
concepts. Case study will entail a review of the mini case that is found at the end of each chapter in the
text. Demonstrations will involve the use of Excel. Usually, each chapter will be covered first by a
lecture that will include the usage of Excel to illustrate selected concepts, then by case study. However,
all three learning elements may be interchanged depending upon the subject matter.

Expectations of students are as follows:
• The relevant chapter in the text should be read prior to the lecture.
• Prior to class, students should review the Tool Kit that pertains to the chapter under study.
• Read the mini case found at the end of the chapter.

Course Requirements:
Spreadsheet Problems: At the end of each chapter is a comprehensive spreadsheet problem. While
students are advised to complete each such problem, several will be collected throughout the
semester. The solutions submitted must consist of print-outs of the Excel file pertaining to that
problem with solutions provided in the appropriate and indicated locations. Electronic files will not
be accepted. The specific problems to be collected as well as the due dates are listed on the Course
Schedule. Late submissions will not be accepted. Solutions for the remaining spreadsheet problems will
be provided on Blackboard. Grades for the spreadsheet problems collected will be based on correct
solutions provided. Note: This is an individual and NOT a group assignment and is governed by the
University’s Academic Integrity Policy.

Exams: There will be two examinations on the dates indicated on the Course Schedule. Each exam will
cover the material reviewed in the previous weeks. They will not be comprehensive. However, since
knowledge in this course builds from the first class, there are always concepts that are present throughout
the semester and have the possibility of being included in each exam. The exam will be completed out of
class and will be found on Blackboard. The due dates for the exams are listed on the course outline.
Note: the University’s Academic Integrity Policy governs these assignments.

Grades:
Grades will be assigned as follows:
       Spreadsheet problems for chapter 3, 4, and 5                          20%
       Spreadsheet problems for Chapter 8                                    20%
       Spreadsheet problems for Chapter 10, 11 and 12                        20%
       Exam on chapters 3, 4, 5 and 6                                        20%
       Exam on chapters 9, 10, 11 and 12                                     20%
        Total                                                               100%

While attendance is always vital, it is even more so with the compressed Summer Term schedule. One
class represents over 15% of the class. You are expected to manage your personal and professional
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schedule in a responsible manner so as to minimize scheduling conflicts. Excessive absences can and
will result in direct and indirect grade reductions.

Academic Integrity Policy:
Each student is expected to complete all requirements of this course in all respects in conformity with
UNCG’s Academic Integrity Policy. If you are unfamiliar with this policy, it can be found in the Policies
for Students handbook or at http://saf.dept.uncg.edu/studiscp/Honor.html.

Other Comments:
Finance is often a challenging subject for students. While many of the terms are familiar, the concepts
are not and can be abstract. Read the text carefully. Make frequent reference to the supplemental
material provided such as each chapter’s Tool Kit. It is strongly suggested that you work the Self-Test
Problems included at the end of each chapter. Solutions to all assigned exercises and problems in the
textbook are included in an Appendix to the text and with details made available to you on Blackboard
following the completion of the relevant chapter. Don’t be afraid to be wrong. You can learn from your
mistakes. Minimal learning occurs from reading the problem and looking at the solution without having
attempted an answer.

There are no opportunities for “extra credit” in this course. Exams may not be reworked for additional
points after they have been graded and returned. The spreadsheet problems and the group projects may
not be reworked or revised after they have been graded for the purpose of raising the assigned grade. No
additional work may be performed after semester grades have been assigned for the purpose of improving
the assigned semester grade.

Proficiency with the basic mechanics of the time value of money is assumed in this course. While we will
spend one class period in review, if you are not comfortable with your skills in this area, you would be
well advised to spend additional time consulting your textbook and/or notes from previous finance
courses.

If you are having problems understanding the subjects presented, SEE ME. Don’t wait until it is too late.
Since this course, like many business courses, builds on prior knowledge, problems in the early portion of
the class will only compound as the semester progresses.

Tentative Course Schedule:
The Tentative Course Schedule is attached. It is intended as a general guide and is subject to change
based upon the developments in class. Modifications and updates will be announced in class and a
revised Course Schedule will be available on Blackboard.




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                             TENTATIVE COURSE SCHEDULE


CL     DATE    CHAPTER        SUBJECT                  READING              TOOL KIT         EXAMS/
#                                                                                            SPREADSHEET
                                                                                             PROBLEM
                                                                                             DUE1
1      5/19    Chapter 1      Overview of Corporate    REQ: p9 to top of    Recommended
                              Finance (Focus on the    p26
                              determination of         REC: pp 1-8 and pp
                              interest rates)          26-46
               Chapter 2      Time Value of Money      REQ: All             Required
               Chapter 3      Risk and Return          REQ: All             Required
2      5/26    Chapter 4      Bonds and Valuation      REQ: All             Required
               Chapter 5      Stocks and Valuation     REQ: All             Required
3      6/2     Chapter 6      The Cost of Capital      REQ: pp 224-242      Required         SS problems
                                                                            (ignore sections for Chapters 3,
                                                                            not covered by 4 and 5.
                                                                            the reading.)
               Chapter 7      Capital Budgeting        REQ: pp 259-274      Required
                                                       REC: pp274-286
               Chapter 8      Cash Flow Estimation     REQ: All             Required
4      6/9     Chapter 9      Financial Statements     REQ: All             Required         EXAM DUE!!
               Chapter 10     Analysis of Financial    REQ: All             Required         SS problem for
                              Statements                                                     Chapter 8.
               Chapter 11     Financial Planning and   REQ: All             Required
                              Forecasting of
                              Financial Statements
5      6/16    Chapter 12     Corporate Valuation,     REQ: All             Required
                              Value-Based
                              Management
               Chapter 16     Working Capital          REQ: All             Required
                              Management
6      6/23    Chapter 17     Option Pricing with      REQ: pp 634-647                       EXAM DUE!!
                              Application to Real
                              Options
               FINAL                                                                         SS problems
               EXAM                                                                          for Chapters
               REVIEW                                                                        10, 11 and 12.




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    Hardcopy solutions ONLY will be accepted.
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