Course Description

Financial Management
Course No.: AFM210

Course Coordinator:
Course type: Lecture
Credit Points: 5
Semester: 3 (The semester depends on the respective curriclum and can be subject to change due to organisational reasons)

Regularly offered in: WS / SS

Course Description
Financial managers in corporations work with other managers to identify investment opportunities, to analyze and value the
opportunities, and to decide whether and how much to invest. Financial managers also have to raise the capital to finance the
corporation's investments. This course is an introduction into the principles of modern corporate finance and financial
management. Topics covered include the role of a financial manager in a business firm, the interplay of accounting and
finance, the use of financial ratios as a tool to evaluate firm financial performance, financial forecasting and planning, the
principles of the time value of money, capital investment analysis, effective interest rates, the processes and procedures
involved in raising funds for business firms, and the fundamentals of debt and equity valuation

Course Objectives
-To be able to interpret financial statements and financial ratios and to use them to assess the financial strengths and
weaknesses of a firm.
-To employ simple techniques of financial planning, and forecast external financing requirements.
-To apply compounding and discounting techniques to calculate present and future values of money and rates of return.
-To learn how to utilize basic investment performance measures in making investment decisions, interpret them, and explain
the strengths and shortcomings of each measure.
-To value bonds and stocks. -To become familiar with debt and equity capital markets

Course Outcomes
Upon completion of this course, the participants will gain knowledge of the fundamentals of Corporate Finance and acquire
important skills related to the financial decision-making process necessary for taking responsibility in a financial department of
a corporation

Literature
Recommended: Ross, Stephen A. / Westerfield, Randolph W. / Jordan, Bradford D.: Fundamentals of Corporate Finance, 8th
ed., McGraw Hill 2008
Recommended: Brealey, Richard A. / Myers, Stewart C. / Marcus, Alan J.: Fundamentals of Corporate Finance, 5th ed.,
McGraw Hill 2007
Recommended: Brigham, Eugene F. / Ehrhardt, Michael C.: Financial Management ? Theory and Practice, 12th ed., Thomson
2007

Workload (for the students)

Preparation (For preparation the students should acquaint themselves with the relevant literature and study the basics of the
co (in hours) 25
Lectures (in hours) 45
Post processing (Post processing time is needed for the preparation of the final examination as well as for the preparation of a
(in hours) 80
Hours total: 150

Evaluation
(30%)
The Continuous Examination requires a written mid-term test during the semester

(70%)
A written exam (60 min.) with open questions dealing with all aspects of the lecture, the assignments and the relevant literature

Page 1 of 2
Course Description
Financial Management
Course No.: AFM210

Instructional Methods
This course will be conducted in the form of lecturing seminars, including discussions in class, and assignments

Content
Introduction to Financial Management
-The role of the Financial Manager and Financial Management decisions
-The goal of Financial Management
-Agency Problems and Control of the Corporation
2.Working with Financial Statements, Taxes and Cash Flow
-Using Financial Statement information
-Deriving cash flow from accounting statements
-Financial Ratios
3.Financial Planning
-How to set up a financial planning model
-Interactions between growth, capital structure policy and dividend policy
4.Introduction to Valuation and Discounting Cash Flows
-The time value of money
-Present values and future values, present values of multiple cash flows
-Annuities and Perpetuities
-Effective annual interest rates
5.Capital Budgeting and Investment Criteria
-The process of capital budgeting
-The Net Present Value
-The Internal Rate of Return
-The Payback rule and other criteria
6.Interest Rates and Bond Valuation
-Corporate and government bonds
-Hybrid bonds, high-yield-bonds, and other types of bonds
-The duration as a sensitivity ratio
-Bond ratings
-Determinants of bond yields, the term structure of interest rates
7.Equity Markets and Stock Valuation
-Common stock valuation
-Preferred stock -International stock markets

Supplemental Material
-Additional reading material from business newspapers, periodicals, and academic journals will be provided during the course

Page 2 of 2