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INSTITUTO TECNOLOGICO Y DE ESTUDIOS SUPERIORES DE MONTERREY

EGADE BUSINESS SCHOOL-Monterrey.

MASTER IN INTERNATIONAL BUSINESS

Fundamentals of Finance
GA4081
July-August 2014

Professor:
Dr. Roco Gmez-Tagle Rangel
e-mail: rgomeztagle@itesm.mx
Phone: +52- 81- 8625 6172

Secretary: Mrs. Carmen Lara


e-mail: carmen.lara@itesm.mx
Phone: +52-81- 8625 6029

COURSE HOURS
Tuesdays & Thursdays 18h00 to 21h30
Room EG217-18

Course description
The Fundamentals of Finance course is an introductory course to the organizational financial
functions. This course is the basis for more advanced courses in the financial area but will help
the students to develop a clear vision around the financial functions and to develop the needed
abilities to interact efficiently in the financial topics of a firm.

Course objectives:
This course will:
Provide students with the fundamental knowledge and tools in finance.
Enable students to understand financial instruments and to make investment decisions.
After finishing the course, the student should:
Know and understand the models, tools and concepts that are used in finance to analyze
and understand the financial problems that a firm faces so he (she) will take reasonable
decisions when solving them.

Pedagogical System:

Text and paper Readings.


Cases.

Problems solving.

Discussions about readings and notices.

Educational intentions

To develop people
o With courage to face changing environments with optimism and energy.
o Who act with honesty and integrity in any area of their lives, personal of
professionally.
To promote in the student team-work activities with the mentality that the team success
depend on the individual commitment.

Learning Methodology
Individual activities
1. Readings.
The student must read the assigned bibliography before the class session. This will help
and promote the discussions in class and help him (her) to solve the cases or problems
that are assigned to be solved by team.
2. Mid Term & Final Exams.
These exams must be answered individually in the date assigned.
3. Team work evaluation.
The student must evaluate his (her) team. Every team member must assign a grade to
the others, assigning a 10 to the team member with the best degree of commitment,
participation and proposals to the problems or case solving; the second student will get a
9 and the third student an 8. There is no auto-evaluation. This information will be sent
CONFIDENTIALLY to the professors by e-mail. These notes will be part of the
participation grade.

Team activities
Teams will be organized with 3 to 4 members selected by the students on the first day of
class. This team will be maintained along the course to work in problems, cases and final
exam
4. Problems / Case solving. Problems to be solved are those with a SOLUTION AT THE
END OF THE BOOK
5. Term Paper.

A. Topic: Financial Analysis of a company currently quoted in the


Mexican Stock Exchange.
B. This activity is team-work developed (the same team working together in this
class along this quarter).

C. Each week, starting on the third session, every team must show advances in
the development of this article. A GOOGLE DOC file is open for this activity
so every team will be able to develop its article using an up-to-date
technology. Every team member must provide input to the development of
every weeks topic.
D. Topics to be included in the article are exactly the same analyzed along the
course:
o
o
o
o
o

Financial Analysis.
Analysis and Valuation of Stocks and Debt issuances.
Analysis of Risk and Return of the company.
Analysis of the Weighted average cost of capital
Analysis of capital structure

E. The article must be written following the structure of

Introduction.
Company Analysis.
Team proposals to the company.
Conclusions.
Bibliography.

Code of Ethics

Please refer to the Legislacin Acadmica para Alumnos de Maestra y Doctorado 2009 and the
recently signed Tecnologico de Monterrey Code of Ethics, We will not tolerate any form of
academic misconduct and will not hesitate to apply the full power of the academic legislation.
We will see that you fail the class and suffer any other academic sanctions that may apply hence
forth.

Evaluation:
Activity

Weight
50%

Mid Term & Final examinations


Homework
20%
(Problem solving, cases analysis)
25%
Term Paper
The term paper will be graded 80/100 and only
with the evidence of uploading it to Conacyt
CVU it will be graded 100/100.
5%
Attendance and participation
2 points assigned by team members and
1points assigned by professor. 2 points will be
added with the evidence of having an updated
Conacyt CVU.

Bibliography:
Basic Bibliography

Ross, Westerfeld, Jaffe, Jordan. CORPORATE FINANCE. McGraw Hill. 9th edition.
2009.

Recommended Bibliography:
o Brealey, R. A./Myers, S. C. Principles of Corporate Finance. 10th edition. Mc
Graw-Hill. 2010
o Brigham; Erhardt. Financial Management: Theory and Practice. 13th edition.
Thomson-SouthWestern. 2010.

Cases:

How Cash Connects with Everything Else: Understanding the Cash Flow Statement
Karen Berman, Joe Knight and John Case. HBS 6559BC
Cash Flows and Proformas UV 2260

New Heritage Doll Company HBS 4212

Shareholders Equity Accounting and Analysis HBS 111055

Kohler HBS 205034

Marriot Corporation: The Cost of Capital HBS298-101

Blaine Kitchenware Capital Structure HBS 4040

Course Contents:
Activities
Session

Topic

1
Introduction to Corporate
Finance
2
Financial Statements and
Cash Flow

3
Financial Statements
Analysis and Financial
Models

Read chapter 1 (RWJ)

Read chapter 2 (RWJ)

Read Appendix 2A

Read: How Cash Connects with


Everything Else: Understanding
the Cash Flow Statement Karen
Berman, Joe Knight and John
Case.

Solve chapter 2 problems

Read chapter 3 (RWJ)

Solve case Cash Flows and


Proformas

4
Discounted Cash Flow
Valuation

5
Net Present Value and Other
Investment Rules

Work on Final Term paper.

Read chapter 4 (RWJ)

Solve Problems in chapter 4

Work on Final Term paper.


Read Chapter 5

Solve case New Heritage Doll


Company

Work on Final Term paper.

6
MID TERM
EXAMINATION
7

Interest Rates and Bond


Valuation

Solve chapter 8 problems

Work on Final Term paper.

Read chapter 9 (RWJ)

Read Shareholders Equity


Accounting and Analysis

Solve Case Kohler

Work on Final Term paper.

Alternative Investment Rules

Read chapter 6 (RWJ)

Net Present Value and


Capital Budgeting

Solve chapter 6 problems

Work on Final Term paper.

Read chapter 10 & 11(RWJ)

Stock Valuation

10

Written exam, individually solved


and applied in the classroom
Read chapter 8 (RWJ)

Capital Market Theory

11

Capital structure

12
FINAL EXAMINATION

Solve Case Marriott

Work on Final Term paper.

Read Chapter 16 and 17 RWJ

Solve Case Blaine Kitchenware

Work on Final Term paper.


Written exam, individually solved
and applied in the classroom

10 Minutes presentation of the


most important highlights of the
Final Term paper of every team.

Case Analysis Methodology

Case Analysis will be done following three stages:


Stage 1: Individual Activity
Stage 2: Collaborative Analysis.
Stage 3: Plenary Session in the classroom.

Stage 1: Individual Activity

Objective of Stage 1: To develop the basis for collaborative work.


Description of Stage 1:

In this stage the student should read and carefully analyze the case.

Write his (her) analysis of the case. This document should include:
o Problem found.
o Critical aspects founded (people, resources, activities, etc).
o Possible solutions.

Every student should write these elements in the section designated in the Course
Blackboard Group Pages.

This stage will prepare the student to discuss the case with his (her) team.

Stage 2: Collaborative analysis (team discussion).


Objective: To exchange knowledge and experiences with the team members to widen the
analysis of the situation, problem or case. The starting point is every member contribution in
stage 1.
Description of stage 2:
It is required to organize the team and assign roles to become efficient in work and time

Read the individual analysis of everyone of the team and start ideas exchanges.

Develop questions and answers.

Support the initial proposals through the ideas proposed by the team members.

Choose and develop a solution or solutions.

Once you shared your different points of views and discussed possible solution
alternatives, every team must prepare a report titled
Stage2_preliminary_Team#_CaseXX including:
o Introduction (Background and general description) to the situation.
o List of critical points related to the situation (people, resourses, etc).
o Reflections about pro/cons effects of the information provided.
o Develop a solution proposal (s) supported by the facts of the problematic
situation, theory, concepts read about the topic analyzed and additional required
research.
o Bibliography used.

One member of the team should upload the file to the Group Pages in the Stage 2 section
for the specific case.

Stage 3: Plenary Session.


Objective of Stage 3: To exchange knowledge and experiences with other teams to widen and
open the analysis of the problematic situation analyzed. The starting points are the reports
prepared by every team.
Decription of stage 3:

Active discussion in the plenary session it is required to every student to share his
knowledge, debate his (her) points of view and answer the professor questions.

In this section you are allowed to question to the other teams, reply to those with contrary
positions to your team or question weak arguments stated by other teams with your
same statement.

At the end of the Plenary Session the professor will


o Summarize the most important issues of the case.

o Will provide feedback to every team

At the end of the Plenary Session, every team should:


o Read again its own report of Stage 2 and add the new ideas acquired in the
plenary session.
o Rewrite the proposed solution (s) or keep the same
o Provide an evaluation of the team activity related to:

What helped get the work done and reach the learning objectives?

What did not help to get the work done and reach the learning objectives?

Compromises acquired by the team members.

One of the team members should upload the final report in the Team
Group Pages. The file should be named
Stage3_definite_Team#_CaseXX

Note of the professor:


I encourage every team that in the following meetings every team member met the requirements
and observations done by the other team members.
Please keep in mind that

Your learning will always impact in the other team-members learning.

Everyone should be responsible of his (her) role in the team in the benefit of everybody.

A complete and precise communication is a requirement of a successful team in every


organization, institution or society.

Exchange help and information to others with a good attitude will help to the confidence
of the team.

Please, do not forget to evaluate your team.