Corporate Finance – First Course – Includes case study
About the Course
The course begins with a basic introduction of notation and terminology. This includes definitions for operating cycles, ownership structures and financial statements. The key concepts surrounding financial statements are further elaborated with the use of a sample balance sheet and explanations of various heads of accounts.
This is followed by an explanation of the associated concepts of risk and reward. Different types of returns are described. Time value of money including compounding and discounting are presented. Opportunity cost and the overhead in using borrowed money for investment, i.e. weighted average cost of capital are discussed. The calculation of interest on debt and interest on equity are further explained with examples.
A detailed case study follows that reviews the balance sheet and profit and loss statements of a given entity Electronic Arts (EA) and, shows how to project the statements to future years and arrive at a valuation for the entity.
After taking this course you will be able to:
- List and define the various operating cycles of a firm
- List and define the various forms of ownership
- List and define the various financial statements
- Describe the various heads of accounts in the financial statements
- Describe what time value of money is and the concepts of discounting and compounding
- Calculate the present value of cash flows
- Calculate an internal rate of return (IRR)
- Define and differentiate between opportunity cost of capital and cost of capital
- Calculate the weighted average cost of capital
- Calculate the rates of return on debt and equity
- Describe the purpose of conducting industry analysis and a review/ analysis of management discussion
- Understand ways in which assumptions are set for financial analysis
- Project the income statement & balance sheet based on the assumptions defined
- Define and calculate free cash flows
- Use free cash flows and WACC to determine the value of an entity
- Assess whether an entity’s share price has been over or under priced
The candidate should be comfortable with basic mathematics and EXCEL.
This course is for beginners in the finance field.