# Loyola University Chicago

## Fall 2014

Loyola University Chicago—John Felice Rome Center

Fall Semester 2014

Day & Time:  Mondays/Wednesdays 5:00-6:15pm

Location:  TBA

Prof. David Pollon

Email:  davidpollon@yahoo.com

Course Description

Principles underlying the financial management of a business: time value of money, securities valuation, capital budgeting, cost of capital, sources of funds, capital structure policy, cash management and dividend policy.

Pre-requisite: ACCT 201 (Financial Accounting), ECON 201 (Introduction to Microeconomics), and ISOM 241 (Business Statistics)

Course Learning Objectives

Upon completion of the course, students should be able to:

1)      Apply fundamental financial techniques to solve common business problems

2)      Evaluate financial opportunities using relevant theory and practice

3)      Critique strategic issues from a financial perspective

Course Learning Activities

Chapter readings are assigned according to the schedule that follows.  Textbook reading is required and is designed both to reinforce what is discussed in class, and to cover topics for which classroom time is insufficient.

End-of-Chapter Problems

Homework problems will be assigned for each chapter.  These problems will not be collected or graded, but selected problems will be discussed in class.  These problems mirror exam questions.

Assessment Tools

Exams  = 90% of the final course grade

There will be three equally weighted exams, each worth 30% of the final course grade.  Grades are awarded based on each student’s correct answers and his ability to clearly explain the calculation process.

Class Participation = 10% of the final course grade

This part of the student’s grade is based on the contribution to class discussions by way of asking and answering questions, and assisting in bringing about a productive learning environment.  Attendance is also included in this part of the course grade.

93-100 = A      86-88 = B+      75-77 = C+     63-67 = D+     below 60 = F

89-92 = A-      81-85 = B        71-74 = C        60-62 = D

78-80 = B-       68-70 = C-

Attendance Policy

Attendance is included in the Class Participation element of the course grade.  However, students missing

more than seven classes, whether excused or unexcused, will fail the course.

Course Textbook

Besley and Brigham. 2013. CFIN3. South-Western, Cengage Learning. ISBN: 1-133-626408

Brigham, Eugene F. and Joel F. Houston. 2012. Fundamentals of Financial Management: ConciseEdition, 7th ed. Thomson South-Western  *Chapters from this textbook are indicated in ( ).

Course Schedule

1) An Overview of Managerial Finance

Finance manager’s responsibilities, business ethics, agency relationships

• Readings: Chapter 1 (no homework) (1)*

2) The Financial Markets and the Investment Banking Process

Financial markets and institutions

3) Financial Statements

Balance Sheet, Income Statement, Cash Flow

• Readings: Ch. 2 (no homework) (3)

4) Analysis of Financial Statements

Ratio analysis

• Readings: Ch. 2 continued (4)

5) The Time Value of Money

Future value, present value

6) The Time Value of Money

Annuities, uneven cash flow streams

7) The Cost of Money

Interest rates

8) Bonds

Characteristics and valuation

9) Review

10) ***Exam #1***

11) Stocks

Valuation and Characteristics

12) Special Topics

Course Schedule continued

13) Risk and Rates of Return

Defining and measuring risk, Capital Asset Pricing Model

14) Capital Budgeting Techniques

Payback, net present value, internal rate of return

15) Special Topics

16) Special Topics

17) The Cost of Capital

Weighted average cost of capital

18) Capital Structure

Business and financial risk, optimal capital structure, degree of leverage

19) Review

• Readings: Ch. 7-9, 11-12 (8-11,13)

20) ***Exam #2***

• Readings: Ch. 7-9, 11-12 (8-11,13)

21) Dividend Policy

Signaling, stock splits, free cash flow

22) Working Capital Policy

Cash conversion cycle

23) Managing Short-Term Assets

Credit policy, managing receivables, inventory level and control

24) Managing Short-Term Liabilities

Accounts payable, short-term bank loans

25) Financial Planning and Control

26) Review

27) ***Exam #3***

To take place during Final Examination Week