COURSE OUTLINE SCHOOL: DEPARTMENT: PROGRAM (if applicable): COURSE TITLE: School of Business Accounting Financial Services Corporate Credit COURSE CODE: FINA 341 TOTAL COURSE HOURS: 60 PRE-REQUISITES/CO-REQUISITES: COURSE ELIGIBILITY FOR PRIOR LEARNING ASSESSMENT AND RECOGNITION (PLAR): ACCT-112 - Financial Accounting 1 MATH-106 - Mathematics of Finance Eligible ORIGINATED BY: REVISED BY: DATE: Harvey Willows Harvey Willows September, 2008 APPROVED BY: Chair/Dean It is the responsibility of students to retain all course outlines for the purpose of applying for transfer of credit to other educational institutions. A fee may be charged for further copies.
Course Information and Description: This course is part of the curriculum for the full-time Financial Services program. The course examines topics related to the financial management of organizations. Instructional methods include lectures, class discussion and problem solving. Specific topics covered are: the goals and functions of financial management, financial forecasting, operating and financial leverage, working capital and the financing decision, current asset management, sources of short-term financing, valuation and rates of return, cost of capital, the capital budgeting decision, and risk and capital budgeting. Course Learning Outcomes: Upon successful completion of this course, the student will have demonstrated the ability to: 1. Identify how finance builds on the disciplines of accounting and economics. 2. Discuss the analytical decision-making nature of finance within a risk-return framework. 3. Describe the primary goal of finance as the maximization of shareholder wealth. 4. Identify possible conflicting goals of finance such as social goals or management interests. 5. Outline the activities of financial managers that are primarily based on the raising and investing of funds in an efficient manner. 6. Identify some domestic and international economic conditions that the financial manger should consider. 7. Identify the role of financial markets in allocating capital. 8. Explain why financial forecasting is essential for the healthy growth of the firm. 9. Prepare the 3 financial statements for forecasting - the pro forma income statement, the pro forma cash budget, and the pro forma balance sheet. 10. Perform the percent-of-sales method forecasting on a less precise basis. 11. Determine the need for new funding resulting from sales growth. 12. Define advantage as a method to magnify earnings available to the firm's common shareholders. 13. Define and calculate operating leverage and assess its opportunities and limitations. 14. Define and calculate financial leverage and assess its opportunities and limitations. 15. Calculate the EBIT/EPS indifference point. 16. Define and calculate combined leverage. 17. Define working capital management as the financing and controlling of current assets of the firm. 18. Describe the nature of asset growth and explain those current assets that are more permanent in nature. 19. Explain that the matching of sales and production may not be efficient in the short run and will likely result in the buildup of current assets. 20. Explain financing of assets in terms of hedging. 21. Describe the term structure of interest rates and explain the theories that explain its shape. Also, discuss the value of the term structure to a financial manager. 22. Identify risk and profitability in determining the financing plan for current assets. 23. Outline current asset management as an extension of Chapter 6 concepts and recognize that a firm's investment in current assets should achieve an acceptable return. 24. Discuss cash management as the control of receipts and disbursements to minimize nonearning cash balances and describe techniques to make cash management more efficient. 25. Define the various marketable securities available to the firm and calculate the yield on these instruments.
26. Describe accounts receivable as an investment based on the firm's credit policies, outline the considerations in granting credit, and evaluate a credit decision that changes credit terms to stimulate sales. 27. Describe inventory as an investment and apply techniques to reduce the cost of this investment. 28. Explain the concept that the less liquid the asset, the higher the expected return. 29. Describe trade credit as an important form of short-term financing and calculate the cost to the firm if a discount is forgone. 30. Describe bank loans as self-liquidating, as short-term, and as having their interest cost tied to the prime rate. Also, calculate interest rates under differing conditions. 31. Describe commercial paper as a short-term, unsecured promissory note of the firm. 32. Review borrowing in foreign markets as a cost-effective alternative for the firm. 33. Explain that offering accounts receivable and inventory as collateral may lower the interest costs on a loan. 34. Demonstrate the hedging of interest rates to reduce borrowing risk. 35. Describe the valuation of a financial asset as based on the present value of future cash flows. 36. Explain that the required rate of return in valuing an asset is bases on the risk involved. 37. Calculate the current value of bonds, preferred shares and common shares based on future benefits or cash flows. 38. Calculate the yields on financial claims based on the relationship between current price and future expected cash flows. 39. Describe the use of a price-earnings ratio to determine value. 40. Explain that the cost of capital represents the overall cost of financing to the firm. 41. Define the cost of capital as the discount rate normally used to analyze an investment. It is an evaluation tool. 42. Calculate the cost of capital based on the various valuation techniques from Chapter 10 as applied to bonds, preferred shares, and common shares. 43. Describe how a firm attempts to find a minimum cost of capital by varying the mix of its sources of financing. 44. Explain the marginal cost of capital concept. 45. Define capital budgeting decisions as long-run investment decisions. 46. Explain that cash flows rather than accounting earnings are evaluated in the capital budgeting decision. 47. Evaluate investments by the average accounting return, the payback method, the internal rate of return, the net present value, and the profitability index. 48. Discuss the use of the cost of capital as the discount rate in capital budgeting analysis. 49. Identify the resultant cash flows that result from an investment decision, including the after-tax operating benefits, and the tax shield benefits of capital cost allowance (amortization). 50. Perform NPV analysis to assist in the decision-making concerning long-run investments. 51. Describe the concept of risk based on the uncertainty of future cash flows. 52. Define risk as standard deviation, coefficient of variation, or beta. 53. Describe most investors as risk averse. 54. Use the basic methodology of risk-adjusted discount rates for dealing with risk in capital budgeting analysis. 55. Describe and apply the techniques of certainty equivalents, simulation models, sensitivity analysis, and decision trees to help assess risk. 56. Discuss how a project's risk may be considered in a portfolio context. Essential Employability Skills:
This course supports the students ability to: communicate clearly, concisely and correctly in the written, spoken, and visual form that fulfills the purpose and meets the needs of the audience. respond to written, spoken, or visual messages in a manner that ensures effective communication. execute mathematical operations accurately. apply a systematic approach to solve problems. use a variety of thinking skills to anticipate and solve problems. locate, select, organize, and document information using appropriate technology and information systems. analyze, evaluate, and apply relevant information from a variety of sources. show respect for the diverse opinions, values, belief systems, and contributions of others. interact with others in groups or teams in ways that contribute to effective working relationships and the achievement of goals. manage the use of time and other resources to complete projects. take responsibility for one s own actions, decisions, and consequences. Prior Learning Assessment And Recognition Process(es): This course is eligible for prior learning assessment: The challenge process is as follows: (1) Interview to inform candidate about (2) and (3) below. (2) Oral Exam. (3) 2.5 hour written exam if successful in (2). Policies: Statement of Accommodation: All students and employees have the right to study and work in an environment that is free from discrimination and/or harassment. It is College Policy to provide accommodation based on grounds defined in the Ontario Human Rights Code. Accommodation may include changes or modifications to standard practices. Students requiring accommodation based on Human Rights grounds should talk with their teacher(s) as soon as possible. Details are available at the Information Centre at each campus.
Faculty Consultation: Teachers are available to see students outside of class time and students can contact teachers via voice mail, email or through their department office. Information regarding how to contact teachers will be provided at the beginning of the course and is also available in the department office. Other Policies: Students should be familiar with the College Policy on Dispute Resolution which covers students rights, responsibilities and the Academic Appeal process. For further information consult the Academic Matters Section in the full-time and continuing education calendars. The Academic Appeal Application form is available from any enrolment services office. Human Rights It is the policy of the College that all programs will strive for a learning teaching and work environment that promotes inclusion, understanding and respect for all students and employees, consistent with the Ontario Human Rights Code and the College s Dispute Resolution Policy and Procedures. Course Policies: A student who misses a test or fails to submit an assignment on the due date will receive a grade of U on that portion of the course. The instructor may administer additional evaluations to ensure that the final course grade fully reflects the student s achievement. The policy relating to academic dishonesty as outlined in the students rights and responsibilities code of conduct and procedures will be fully enforced. PROBATIONARY POLICY: A revised probationary policy is in place. Please contact your academic department for details. Use of Dictionaries Students are permitted to use a bilingual paper dictionary during tests and exams. The invigilator reserves the right to examine the dictionary for any supplemental notations. Final Examination Policies
Students are obliged to produce official photo identification at any time during the semester when requested to do so by any professor. The official piece for full-time students is the Centennial Student Card. Continuing Education students do not have Centennial Student Cards, and so may use other forms of photo identification, such as a driver s license. Students must put their official photo-id cards (or other photo ID, in the case of CE students) in full view when writing a test or examination, whether in the classroom or in the gym. Full-time students who do not have official photo-id will be permitted to write the examination with a substitute photo-id but they will be required to produce a photo-id within 24 hours or examination results will be void. Evaluation and Grading Systems: Assignment & Quizzes 10% Lyryx Assessment Labs 20% (or you could go with 15%..) Mid-Term Test 30% Comprehensive Final Exam 40% Total 100% Final examinations should be retained for one year by the College; however, it is college policy to make final examination papers available to students for review on request. Text and Other Instructional/ Learning Materials: FOUNDATIONS OF FINANCIAL MANAGEMENT, Seventh Canadian Edition, Block, Hirt, Short. McGraw Hill Publishers. Packaged with Lyryx Assessment for Finance. ** Please ensure you purchase the correct package that includes Lyryx. ISBN: 007-078-2539 ** If you already have at text, or purchase a text without the Lyryx pin code, you can purchase it online for $39.95 at http://login.lyryx.com REFERENCE: Study Guide to accompany text above. About Lyryx (pronounced lyrics ) Lyryx is an online resource that contains interactive assessment tools for students in the form or Lyryx Labs. The work that you do in the Lyryx Labs is worth 20% of your final mark. Students can complete each question in the Labs as many times as they want between the start date and the due date and only their best mark will be kept. Students are encouraged to
click on Help Pages for answers to the most common questions regarding Lyryx, including registration, general navigation, completing labs and technical information. Students must register with Lyryx at https://login.lyryx.com using the pincode packaged with their text at the bookstore. Students save 50% on the price of Lyryx in this package or they can purchase Lyryx online at full price without the pincode at https://login.lyryx.com. Lyryx Help and Support Lyryx offers support to students and faculty 7 days/week. Go to https://login.lyryx.com/ and click on the Contacts link to email Lyryx for any help you require or click on the Help link.
Week Topic/Content Readings Instructional Objectives Instructional Strategies/ Tests and Assignments 1AB The Goals and Functions of Financial Management Chapter 1 See Learning Outcomes 1-7 Selected Discussion Questions Lyryx Lab 1 2AB/3A Financial Forecasting Chapter 4 See Learning Outcomes 8-11 Selected Problems Lyryx Lab 2 3B/4AB Operating and Financial Leverage Chapter 5 See Learning Outcomes 12-16 Selected Problems Lyryx Lab 3 5AB/6A Working Capital and the Financing Decision Chapter 6 See Learning Outcomes17-22 Selected Problems Lyryx Lab 4 6B/7AB Current Asset Management Chapter 7 See Learning Outcomes 23-28 Selected Problems Lyryx Lab 5 8A Midterm Test Chapters This test is worth 30% of your final grade 1,4,5,6,7 8B/9AB Sources of Short-Term Financing Chapter 8 See Learning Outcomes 29-34 Selected Problems Lyryx Lab 6 10AB/11A Valuation and Rates of Return Chapter 10 See Learning Outcomes 35-39 Selected Problems Lyryx Lab 7 11B/12AB Cost of Capital Chapter 11 See Learning Outcomes 40-44 Selected Problems Lyryx Lab 8 13AB The Capital Budgeting Decision Chapter 12 See Learning Outcomes 45-50 Selected Problems Lyryx Lab 9 14AB Risk and Capital Budgeting Chapter 13 See Learning Outcomes 51-56 Selected Problems Lyryx Lab 10 15 Comprehensive Final Exam This exam is worth 40% of your final grade