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FINANCE MANGEMENT (BS at Vilnius University 3'rd year International Business Group)

   

VILNIUS UNIVERSITY

BUSINESS SCHOOL

FINANCE MANGEMENT

Prepared by prof. dr. Arvydas Paškevičius

The aim of the course is to form theoretical and practical finance management skills that would enable one to successfully plan, organise, analyse, and assess the financial performance of a company and the projects of its development.

Intended outcomes of the subject: The ability to establish the value of stocks by means of a discounted cash flow method; The ability to calculate the net present value by means of a discounted cash flow method; The ability to calculate the criteria of the payback time, the discounted payback time, the average book return, the internal profit rate, and the profitability index, The ability to establish the income and expenditure of a capital investment project and to present them in the cash flow financial forms; The ability to assess the cost-reducing investments and to calculate the minimum tender price; The ability to analyse capital investment projects by means of the “what-if“ analysis method and to calculate the accounting and financial breakeven.

The purpose of the course is not only to acquaint the students with the fundamental concepts of corporate managerial finance but also to formulate practical skills while solving elementary financial problems. Therefore, the course includes not only theoretical lectures but also practical work and home assignments. The course consists of 48 hours, 5 credits.

ONLINE STUDIES

„World Health Organization has declared the infections COVID-19 caused by SARS-CoV-2 coronavirus a pandemic, therefore the University has decided to preventively halt the study process. . Students and employees should study remotely via on-line measures - lectures and seminars will not be happening in the University's classes.”

Pro-Rector for Community Affairs

Dr. Birutė Švedaitė - Sakalauskė

Dear students.

We will work online through several programs.

First of all, the VMA you already know well. There you will find a self-test and exam that will be taken from home, online. And also a link to this page.

Second, my WEB page. Here you will find all the information about the course organization, lecture schedule and content, lecture slides, exercise assignments, test questions, lectures, assessment requirements and your exam results.

Third, the MS Teams program. This program will be used to read lectures online, organize online exercises and present your case study analyses online. 

Instructions for installing the MS Teams program can be found HOW TO ATTEND A VIDEO LECTURE (Instructions in English are given at the end).

After installing Teams, use the link to join International business 3k. Finance Management 

 

SUBJECT (MODULE) DESCRIPTION

VMA

SCHEDULE

Nr.	S.D.	Data	Time	Room	Chapter	Notes
1	Thu	04 February 2021	11:00-12:30	online	Net Present Value and other investment Criteria
2	Thu	04 February 2021	13:00-14:30	online	Net Present Value and other investment Criteria	Homework: Chapter 9 Questions and Problems # 1-16
3	Thu	11 February 2021	11:00-12:30	online	Net Present Value and other investment Criteria  PRACTICE	.
4	Thu	11 February 2021	13:00-14:30	online	Net Present Value and other investment Criteria  PRACTICE	Homework: Chapter 9  Test Questions
5	Thu	18 February 2021	11:00-12:30	online	Net Present Value and other investment Criteria  Preparation to the Test	.
6	Thu	18 February 2021	13:00-14:30	online	An analysis of crowdfunded projects	Homework: Preparation for examination. Self-test
7	Thu	25 February 2021	11:00-12:30	online	Test #1	It is mandatory to turn on the MS TEAMS and the video camera during the test
8	Thu	25 February 2021	13:00-14:30	online	Making Capital Investment Decisions	Homework: Chapter 10 Questions and Problems # 1-5
9	Thu	04 March 2021	11:00-12:30	online	Making Capital Investment Decisions An analysis of crowdfunded projects	.
10	Thu	04 March 2021	13:00-14:30	online	Making Capital Investment Decisions PRACTICE	Homework: Chapter 10 Questions and Problems # 6-18. Chapter 10  Test Questions
11	Thu	11 March 2021	11:00-12:30	online	Restoration of Independence Day	.
12	Thu	11 March 2021	13:00-14:30	online
13	Thu	18 March 2021	11:00-12:30	online	Making Capital Investment Decisions PRACTICE
14	Thu	18 March 2021	13:00-14:30	online	Making Capital Investment Decisions PRACTICE	Homework: Preparation for examination. Self-test
15	Thu	25 March 2021	11:00-12:30	online	Making Capital Investment Decisions Preparation to the Test
16	Thu	25 March 2021	13:00-14:30	online	Making Capital Investment Decisions Preparation to the Test
17	Thu	01 April 2021	11:00-12:30	online		Easter holidays
18	Thu	01 April 2021	13:00-14:30	online
19	Thu	08 April 2021	13:00-14:30	online	Test #2	It is mandatory to turn on the MS TEAMS and the video camera during the test
20	Thu	08 April 2021	15:00-16:00	online	Project analysis and evaluation	Homework: Chapter 11 Questions and Problems #1-6.
21	Thu	15 April 2021	11:00-12:30	online	Project analysis and evaluation
22	Thu	15 April 2021	13:00-14:30	online	Project analysis and evaluation	Homework: Chapter 11 Questions and Problems #7-15.
23	Thu	22 April 2021	11:00-12:30	online	Project analysis and evaluation PRACTICE
24	Thu	22 April 2021	13:00-14:30	online	Project analysis and evaluation PRACTICE. Preparation to the Test #3	Homework: Preparation for examination. Self-test
25	Thu	29 April 2021	11:00-12:30	online	Test #3	It is mandatory to turn on the MS TEAMS and the video camera during the test
26	Thu	29 April 2021	13:00-14:30	online	Case study presentations 1. Target Corporation   2. Whirlpool Europe 3. Net Flix
27	Thu	06 May 2021	11:00-12:30	online	Case study presentations
28	Thu	06 May 2021	13:00-14:30	online	Case study presentations
29	Thu	13 May 2021	11:00-12:30	online	Preparing for the final exam
30	Thu	20 May 2021	11:00-12:30	online	EGZAM	It is mandatory to turn on the MS TEAMS and the video camera during the test

SYLLABUS

1.     Introduction to Corporate Finance

1.1. Corporate Finance and the Financial Manager

1.2. The Forms of Business Organization

1.3. The Goal of Financial Management

1.4. The Agency Problem and Control of the Corporation

1.5. Financial Markets and the Corporation

       Lecture Notes               Test Questions 

2.     Financial Statements and Cash Flow

2.1. The Balance Sheet

2.2. The Income Statement

2.3. Cash flow

                Lecture Notes             Test Questions 

3. Working with Financial Statements

3.1. Cash Flow and Financial Statements: A Closer Look

3.2. Standardized Financial Statements

3.3. Ratio Analysis

3.4. The Du Pont Identity

3.5. Using Financial Statement information

                  Lecture Notes        Q&P        Test Questions 

4. Long-term Financial Planning and Growth

4.1. What is Financial Planning?

4.2. Financial Planning Models: A First Look

4.3. The Percentage of Sales Approach

4.4. External Financing and Growth

                  Lecture Notes      Q&P        Test Questions 

5. The Time Value of Money

5.1. Future Value and Compounding

5.2. Present Value and Discounting

5.3. More on Present and Future Values

                Lecture Notes       Q&P        Test Questions 

6. Discounted Cash Flow Valuation

6.1. Present and Future Values of Multiple Cash Flows

6.2. Valuing Level Cash Flows: Annuities and Perpetuities

6.3. Comparing Rates: The Effect of Compounding

6.4. Loan Types and Loan Amortization

                   Lecture Notes       Q&P        Test Questions 

7. Interest Rates and Bond Valuation

7.1. Bonds and Bond Valuation

7.2. More on Bond Features

7.3. Bond Ratings

7.4. Some Different Types of Bonds

7.5. Bond Markets

7.6. Inflation and Interest Rates

7.7. Determinants of Bond Rates

                      Lecture Notes      Q&P       Test Questions 

8. Stock Valuation

8.1. Common Stock Valuation

8.2. Some Features of Common and Preferred Stock

8.3. Stock Markets

                    Lecture Notes        Q&P        Test Questions 

9. Net Present Value and Other Investment Criteria

9.1. Net present value

9.2. The Payback Rule

9.3. The Discounted Payback

9.4. The Average Accounting Return

9.5. The Internal Rate Of Return

9.6. The Profitability Index

                  Lecture Notes         Q&P           Test Questions 

10. Making Capital Investment Decisions

10.1. Project Cash Flows: A First Look

10.2. Incremental Cash Flows

10.3. Pro Forma Financial Statements and Project Cash Flows

10.4. More on Project Cash Flow

10.5. Alternative Definitions of Operating Cash Flow

10.6. Some Special Cases of Cash Flow Analysis

              Lecture Notes        Q&P           Test Questions 

11. Project analysis and evaluation

11.1. Evaluating NPV Estimates

11.2. Scenario and Other What-If Analyses

11.3. Break-Even Analysis

11.4. Operating Cash Flow, Sales Volume, and Break-Even

11.5. Operating Leverage

11.6. Capital Rationing

               Lecture Notes        Q&P           Test Questions 

CASE  ANALYSIS  AND  PRESENTATION

Student’s registration of case studies  

Send requests and presentations: arvydas@paskevicius.com

The example of presentation: Health Development Corporation   Presentation     Excel

Slide presentations limited to a duration of 10-15 minutes. (desirable in the University form of presentations). Presentations file name must be shortened name of the case. Calculation tables, as additional material illustrating the decision is contained in the Excel form. The presentation you have to send no later than 24 hours before the presentation. The first slide specify: the theme and the author (s) surname (s).

Case studies do not have a straight answer. Different people shall bring a unified solution, so the analysis of the case must present YOUR decision and justify it argumentative. The analysis of the test should be kept in mind that the latest information about the problem and the company can be find on the internet.

Assessment of case analysis and presentation:

1. Presentations submission timeliness, slide quality, oratorical art, audience involvement in the case study 0-3.

2. The complexity of the analysed problem 0-3

3. Case studies breadth, i.e. quite a lot of work done 0-4

4. Depth of the case analysis, i.e. use sophisticated analytical techniques 0-4

5. It was collected an additional, interesting and valuable material on the Internet. For example how the company is now doing, what the consequences, modern innovations. 0-2

6. A summary of the findings, what is memorable, the most valuable of the case presented, where you can apply the acquired knowledge 0-2

7. Working as opponent of the peer presentations or active participation in the cases analysis 0-1.  Good questions or comments prized pluses, 3-4 pluses equal to 1 point.

CASES

1.    Lockheed Tri Star and Capital Budgeting. Pages 367-369.

2.    Merck & Company: Evaluating a Drug Licensing Opportunity. Pages 371-376.

3.    Tree Values. Pages 377-379.

4.    The Super Project. Pages 381-394.

5.    NetFlix.com, Inc. Pages 395-403.

6.    A-Rod: Signing the Best Player in Baseball. Pages 405-418.

7.    Ocean Carriers. Pages 419-423.

8.    Whirpool Europe. Pages 425-430.

9.    Health Development Coporation. Pages 431-434.

10. The Investment Detective   (Investment criteria and discounted cash flow) Page 257  

Evilė Raupelytė

Aistė Prialgauskaitė

Presentation   Excel

11. Worldwide Paper Company  (Analysis of an expansion investment)   Page 259

12. Target Corporation  (Multifaceted capital investment decisions)   Page 263

13. Aurora Textile Company  (Analysis of an automation investment)   Page 283

14. Compass Records  (Analysis of working capital investment)   Page 295

15.  Victoria Chemicals plc (A): The Merseyside Project  (Relevant cash flows)   Page 309

16. Victoria Chemicals plc (B): Merseyside and Rotterdam Projects  (Mutually exclusive investment opportunities)   Page 317

Aistė Sedlevičiūtė

Aušrinė Krūminytė.

Presentation   Excel

17.  Euroland Foods S.A.  (Strategic resource allocation)  Page 325

18. Star River Electronics Ltd.(Capital project analysis and forecasting)   Page 337 

LITERATURE

1. Fundamentals of Corporate Finance, Ross, S. A. 2016.

2. Principles of Corporate Finance, Brealey, Myers, 2016.

3. Financial Management, Ray M. Brooks. 2010.

4. Capital Markets, Fabozzi Modigliani. 2010 .

EVALUATION

Assessment requirements:

Analysis and solutions of tasks and problems at seminars, attendance of lectures and practical classes, interim tests, examination.

Final assessment criteria:

The grade assigned for problem solution at seminars is multiplied by 10%.

The grade assigned for case study task solution is multiplied by 30%.

Colloquium tests shall be taken by electronic means at the Examination center. Students are required to solve not less than 50% of all tasks presented in 3 tests. Where the grade for the colloquium is above 5, it is multiplied by 20% and shall be added to the final result. It is necessary to pass all 3 tests.

Composition of the final accumulative grade:

The final accumulative grade shall be composed of: 

Problem solutions at seminars and lectures – 10 %

Case study task solution – 30%

Grade from colloquium 1 – 20%

Grade from colloquium 2 – 20%

Grade from colloquium 3 – 20%

        TEST  RESULTS  

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