CORPORATE FINANCE

Course code FIN117

Course title Corporate Finance
Type of course Main
Year of study 2nd-4th
Semester Summer Program
ECTS 6: 36 hrs. - lectures and workshops, 124 hrs. - self-study, 2 hrs. -
consultations
Coordinating lecturer Dmitrij Katkov; dr. Asta Klimavičienė
Study form Full-time; free-mover
Course prerequisites Financial Accounting
Language of English
instruction

Annotation
This course unit focuses on the fundamental concepts of corporate finance. It is designed as an
introduction to financial management, and covers both theoretical and empirical aspects of capital
investment decisions, valuation and financing decisions. This course examines the financial goals of a
corporation with an emphasis on value creation.
The main goal of the course is to provide theoretical knowledge and practical tools that are required in
financial decision-making.

Aims of the course

This course unit aims to provide an understanding of main principles of corporate finance: core
investment decision rules, capital budgeting, methods of long- and short-term financing, and associated
theoretical and empirical issues.

Learning outcomes
Upon successful completion of the course, students will be able to:
 Analyse and evaluate company’s activities and financial condition from financial statements (balance
sheet, income statement, cash flow statement) applying financial ratios;
 Apply the concept of the time value of money to solve various financial problems;
 Evaluate investment projects using different methods: NPV (net present value) and its alternatives;
 Calculate company’s WACC, interpret it and its components in perfect markets as well as taking taxes
into account;
 Evaluate and compare different methods of long- and short-term financing;
 Relate the main tasks in financial management and corporate finance, discuss the risk of financial
decisions.

Learning methods
Multiple learning formats are used throughout the course, including lectures, workshops, homework
assignments and classroom presentations.

Quality issues
Lecturers assure a variety of teaching and testing methods. The feedback from students is always highly
valued and appreciated.

Cheating issues
The teaching and testing methods are chosen taking into account the purpose of the minimization of
cheating opportunities. The ISM regulations on academic ethics are fully applied in the course.

1
 Course topics
Class
No. Topic
hours
1,5 Lecture. Course introduction
1 1,5 Lecture. Financial Markets and Environment
Self-study. Homework exercises
1,5 Workshop. Review of financial statements
2 1,5 Lecture. Financial statement analysis 1 (Economy and Industry)
Self-study. Industry analysis reading
1,5 Workshop. Financial statement analysis 2 (Financial ratios)
3 1,5 Lecture. Financial statement analysis 3 (Integration)
Self-study. Homework exercises
1,5 Workshop. Time Value of Money
4 1,5 Lecture. Time Value of Money
Self-study. Working on a project
1h 05 Mid-term test. Multiple choice questions, exercises.
5 1h 10 Lecture. Net present value (NPV) and alternative investment appraisal rules
Self-study. Homework exercises
1h 05 Workshop. NPV and alternative investment appraisal rules
6 1h 10 Lecture. Implementing NPV
Self-study. Reading; homework exercises
1h 05 Workshop. Implementing NPV
7 1h 10 Lecture. Capital structure
Self-study. Working on a project; homework exercises
1h 05 Workshop. Capital structure
8 1h 10 Lecture. Long-term financing
Self-study. Working on a project; homework exercises
1,5 Workshop. Coursework presentations
9
Self-study. Reading; homework exercises
1,5 Lecture. Workshop. Short-term financing.
10
Self-study. Homework exercises
1,5 Lecture. Workshop. Wrap-up of the course, revision for the exam.
11
Self-study. Preparing for the exam.
1,5 Exam. Multiple choice questions, exercises.
12
Grading and comments.

Pre-coursework:

Students will be required to read M. Porter “Five Competitive Forces that Shape Strategy” article and
apply the 5 Porter forces to analyse the return on equity of a particular industry. This pre-coursework
will help students to conduct financial analyses of the chosen companies for the coursework.

Coursework

Students work in small groups to prepare a comparative analysis of two listed companies based on
financial ratios. Details on the coursework will be provided during the first class.

2
Grading rules
Graded assignments and their contribution to the final grade are shown in the table below.

ASSIGNMENT % OF THE FINAL GRADE

Pre-course assignment 10
Mid-term test 25
Coursework 30
Participation 10
Exam 25
Final grade: 100

Instructors reserve the right to add up to 1 extra point to the final grade based on the contribution and
professionalism exhibited by the student in class.

Mid-term test

It will be held after the first week of classes. It counts towards 25% of the final grade. The midterm test
will be based on topics 1-4.

Final exam
The exam counts towards 25% of the final grade. It is a closed-book test which includes multiple choice
questions and open questions. It tests conceptual, analytical, and numerical skills. The exam will be
based on topics 5-11.

In case of a negative final grade, students are allowed a re-sit exam. It will cover all course material. The
weight of a re-sit is 50%. Assignments cannot be rewritten.

Literature

Main readings:
1. Hillier D., Ross S., Westerfield R., Jaffe J., Jordan B., 2010. Corporate Finance: First European
Edition. McGraw-Hill Higher Education.
Additional readings:
1. Berk, J., DeMarzo, P., 2007. Corporate finance. Pearson International Edition.
2. Brealey, R.A., Myers, S.C., 2003. Principles of corporate finance. McGraw-Hill.