Financial Management Brigham Chap 12

							                                      Syllabus
                               Financial Management
                                    Finance 311
                                     Section 02
                               Winter Quarter, 2004


I.    Basic Information
      Meeting Times:        4:10 – 5:50 Tuesday & Thursday
      Location:             167 Rike Hall
      Instructor:           James E. Larsen, Ph.D.
      Office:               260L Rike Hall
      Office hours:         Tuesdays: 9:30 pm – 10:15 pm
                            Thursdays: 3:00 pm – 4:00 pm & 6:00 pm – 7:00 pm
                            and by appointment
      Office phone:         937-775-2870
      Fax:                  937-775-3545
      e-mail:               james.larsen@wright.edu
      Required Text:        Fundamentals of Financial Management Concise, Fourth
                            Edition,
                            Selected Chapters from Fundamentals of Financial
                            Management, 10th Edition, and
                            Casebook for 311
                            all by Eugene Brigham and Joel Houston
      Reserve Material:     None
      Calculator:           The Texas Instruments BA-II Plus is required for this
                            course.
                            Calculators may not be shared during quizzes.
      Homepage:             www.wright.edu/~james.larsen


II.   Course Description

      This course, the second of a two-course sequence, provides an overview of the
      theories, concepts, and analytical techniques of financial management. The
      student should gain an understanding of the role of the finance function and the
      financial manager in today’s business environment, an ability to recognize and
      solve a variety of financial problems, and an appreciation for the
      interrelationships between the finance function and other functional areas of
      business.
III.   Learning Objectives

       Upon completion of the course, students should:
        Be able to identify the appropriate cash flows, and combine these to determine the
          net cash flows to be used in the capital budgeting decision process.
        Be able to apply the concepts of time value of money to the selection of expansion
          and replacement capital budgeting projects.
        Understand how to modify capital budgeting analysis to account for project risk
          differentials.
        Understand business risk and financial risk and the influence of operating and
          financial leverage on each.
        Understand the impact of capital structure on firm risk.
        Understand how firms should use a mix of debt and equity to finance operations.
        Understand common dividend theories and practices.
        Understand the factors considered when changing dividend policies.
        Be able to demonstrate how a firm’s dividend policy may affect the firm’s capital
          structure and capital budgeting decision process.
        Understand the use of stock repurchases as an alternative to increases in dividends.
        Understand alternative current asset investment policies
        Understand cash management issues and the tradeoff between cash and marketable
          securities
        Understand inventory control systems
        Understand receivables management
        Understand the advantages and disadvantages of short-term financing
        Understand the costs associated with trade credit and various short-term bank loans
        Be able to identify sources of risk in corporations
        Know the variety of derivative instruments available for risk management
        Understand how to use various derivative instruments to mitigate risk
        Understand exchange rates
        Understand the international monetary system
        Understand interest rate parity and purchasing power parity
        Understand capital budgeting in a multinational setting
        Understand the impact of international sources of funds on international capital
          structure
        Understand the leasing decision and evaluation from the perspectives of both parties
          to the contract.
        Become familiar with hybrid types of financing such as preferred stock, warrants,
          and convertibles.
        Be able to compute both the straight bond and conversion values of convertible
          bonds and understand the determinants of market value.
        Discern acceptable rationales for mergers.
        Value a target firm using both discounted cash flow and market-multiple methods.
        Understand the decision to pursue divestiture.
IV.    Prerequisites:         FIN 310


V.     Mode of Instruction:

       Classes will be a combination of lecture, discussion, cases, and problem solving.


VI.    Student Preparation for class

       Students should read the assigned text material and work the assigned problems
       prior to coming to class. Problems and questions similar to those assigned will
       appear on exams. Some, but not all of the assigned problems will be worked in
       class.

       Attendance is expected and participation in class discussion is essential. Learning
       is a two-way street and students will be called on to participate.


VII.   CASES

       It is expected that each student will thoroughly prepare each case before the
       assigned due date. Students will prepare a maximum two-page, typed, brief of the
       case to be turned in at the beginning of class on the session the case is due.
       Do not waste space recounting the facts of the case. The brief should highlight -
       1) your recommendation of what should be done, 2) important issues in the case,
       3) erroneous assumptions or methodologies and the proper handling of errors
       detected, as well as 4) an answer to any questions explicitly posed in the case.
       Each case brief is worth 25 points. You should keep a copy of your brief to aid
       in our discussion. During case discussions, students will be called on randomly
       to explain the central issues within each case and to explain the appropriate
       resolution of major issues. Both the brief and the discussion require that each
       student has actually performed all analyses and calculations necessary to resolve
       each case.

       It is strongly recommended that students meet in groups to discuss each case and
       perhaps reach some consensus opinion resolution of the case. If your group
       arrives at a consensus, the group may hand in a single brief with all group
       members’ names shown. If, however, a consensus is not achieved, students with
       dissenting opinions should submit a separate case brief. Even if you submit a
       group report, it is important that you realize that you will be individually
       responsible for both your briefs and your responses in class and that your "case
       grade" will depend on your personal efforts.

       Late cases will be accepted, but the maximum score will be 17.5 points.
 VIII. Grading

        Quizzes (100 points each)    300 points                A = 450 points and above
        Homework                      50 points                B = 400 – 449 points
        Case Briefs (25 points each) 100 points                C = 350 – 399 points
        Participation                 50 points                D = 300 – 349 points
        Total                        500 points


 IX.    ASSIGNMENT SCHEDULE

Date   Reading Assignment Class Topics                                   Written Assignment
Day
1-6    Chapter 10              Introduction
T                              Capital Budgeting Review
1-8    Chapter 11              Cash Flow Estimation & Risk               Chapter 11: Prob. 1-16
R                              Analysis
1-13   Case 11: Chicago                                                  Case 11: Chicago Valve Company
T      Valve Company
1-15   Chapter 12              Capital Structure & Leverage
R
1-20   Chapter 12              Capital Structure & Leverage              Chap. 12, Prob. 1-14
T
1-22   Chapter 13              Distributions to Stockholders
R
1-27   Chapter 13              Distributions to Stockholders             Chap. 13, Prob. 1-10
T
1-29   Case 51: The                                                      Case 51: The Western Company
R      Western Company
2-3    QUIZ 1                  Chapters 10-13
T
2-5    Chapter 14              Working Capital Management
R
2-10   Chapter 15              Financial Planning & Forecasting          Chap. 14, Prob. 1-15
T
2-12   Chapter 15              Financial Planning & Forecasting          Chap. 15, Prob. 1-15
R
2-17   Case 36N: Garden                                                  Case 36N: Garden State Container
T      State Container Corp.                                             Corp.
2-19   Chapter 16              Multinational Finance                     Chapter 16, Prob. 1-15
R
2-24   QUIZ 2                  Chapters 14-16
T
2-26   Chapter 18              Derivatives & Risk Management
R
Date   Reading Assignment Class Topics                             Written Assignment
Day
3-2    Chapter 18          Derivatives & Risk                      Chap. 18, Prob. 1-7
T
3-4    Chapter 20          Preferred Stock, Warrants, Leasing, &   Chap. 20, Prob. 1-10
R                          Convertibles
3-9    Case 27: Virginia                                           Case 27: Virginia May Chocolate
T      May Chocolate                                               Company
       Company
3-11   Chapter 21          Mergers & Acquisitions                  Chap. 21, Prob. 1-5
R
3-16   QUIZ 3 @ 5:45 pm    Chapters 18, 20, & 21
T