GMBA Batch: November 2011  S P JAIN

Singapore   DUBAI,  SINGAPORE & 
SYDNEY
Corporate Finance 1 and 2
Credit:  2.0  Faculty:  Prof. R Krishnan  Sessions:  18 

Section 1: General Information

1.1 Administrative details:

Associated HE Award(s) Duration Level Subject Coordinator

(eg Bachelor, Diploma) (eg one semester, (eg introductory,
full year) intermediate, advanced
level or 1st year, 2nd
year, 3rd year etc
Master of Global Business (MGB) 12+4 (16 Months) Term 1

1.2 Core or elective subject/unit

Indicate if the subject/unit is a

core subject/unit
elective subject/unit
other (please specify below):

1.3 Subject/unit weighting

Indicate below, the weighting of this subject/unit and the total course points (eg 10 credit points for the subject/unit and
320 credit points for the course)
Subject/Unit Credit Points Total Course Credit Points
2 40

1.4 Student workload

Indicate below, the expected student workload per week for this subject/unit:
No. timetabled hours/week* No. personal study hours/week** Total workload hours/week***
9 9 18
* Total time spent per week at lectures, tutorials, clinical and other placements etc
** Total time students are expected to spend per week in studying, completing assignments, etc
*** That is, * + ** = workload hours.

1.5 Mode of Delivery

Indicate if this subject/unit is delivered

face to face
online
independent learning module/un timetabled study
by a combination of modes (please specify below)
through a practicum
other mode (please specify below)

1.6 Pre-requisites

Are students required have undertaken a prerequisite/co-requisite subject/unit(s) for this subject/unit?

Yes
No

If yes, provide details of the prerequisite/co-requisite requirements below:

Accounting for Decision Making

1.7 Other resource requirements

Do students require access to specialist facilities and/or equipment for this subject/unit (eg special computer access /
physical education equipment)?
Yes
No

If yes, provide details of the requirements below:

Note: Access to these requirements should be detailed under 3.5 in the accreditation application form.
Section 2 – Academic Details

2.1. Student learning outcomes

Students will build on the accounting concepts learnt during the course ‘Accounting for Decision Making’. The ‘Accounting for Decsiosn
Making’ course introduces the students to financial impact of various decisions made in the past. The Corporate Finance course will teach
them how those decisions are taken by the management and what is the inter-realtionship between different decisions.

At the end of the subject students shall be able to:

a) Evaluate critically the role of corporate finance in business decisions and role of corporate finance in a global organization
b) Have knowledge about time value of money and its application in techniques of capital investment decisions such as NPV, IRR,
etc
c) Learn various financing methods – both short term and long term
d) Develop the skill for financial decision making relating to capital structure, financial planning, dividend policy, etc

2.2 Course content and structure

Day Theme Reading/Case
Corporate Finance:
Finding Meaning in Financial
• Functions &Objectives
1 Statements: A Look Behind the Lecture and Discussion
• Wealth Maximization vs Profit
Numbers (HBP Book Chapter)
Maximization
HBR Note on Financial
Financial Planning
Forecasting
‐ Financial Forecasting and Estimating Fund
Lecture, Discussion and
Requirements
HBR Exercise: Note on Financial Problem Solving
2 ‐ Preparing Performa Financial Statements
Forecasting, Problems (HBP)
‐ Financial Decisions and Impact on Financial
Statements
HBR Case: Tire City, Inc.

Financial Planning HBR Note on Cash Budgeting /

‐ Short Term Plan Cash Management (HBP) Lecture, Discussion and
‐ Preparation of a Cash Budget Problem Solving
3
HBR Case: Hampton Machine
Tools

Working Capital Decisions HBR Article: The Magic of

‐ Estimation of Requirement and Policy Managing the Balance Sheet :
How to Manage Working Capital Lecture, Discussion, Problem
‐ Cash Conversion Cycle
(HBR) Solving, and Case Analysis
4-5 ‐ Strategic Importance of Working Capital in a
Global organization Case: Dell’s Working Capital

HBR Note: Present Value: A Note Lecture, Discussion and

Concept and Application of Time Value of Money
on Personal Applications Problem Solving
6 &7 ‐ Time Value of Money and Cash Flow
‐ Financial Applications – NPV, Annuities & IRR
HBR Note on Bond Valuation and
Bonds and Shares Valuation: An Introduction Returns
‐ YTM
Lecture, Discussion and
‐ Effective Rate HBR Note: Basic Ratio Analysis
Problem Solving
8-9 ‐ Dividend Models and Equity Valuation
‐ Earnings Capitalization
‐ Discounted Cash Flows

Capital Budgeting HBR Note: Introduction to

‐ Identifying, analyzing and measuring cash Accumulated Value, Present
flows relevant to Capital Exp. Value, and Internal Rate of Return
Lecture, Discussion, Problem
‐ Key Cash Flow measures for Investment (HBP)
Solving, and Case Analysis
decisions
10-11-
‐ Comparing Measures for investment decisions
12
-NPV vs IRR HBR Case: Alternative: Valuing
‐ Capital Rationing and Profitability index Capital Investment Projects
‐ Risk, Return, Sensitivity Analysis and Capital
Budgeting HBR Case2: Ocean Carriers

HBR Note: Diversification, the

Understanding Risk and Return Capital Asset Pricing Model, and
‐ Systematic and Un-Systematic risk the Cost of Equity Capital Lecture, Discussion and
13 ‐ Individual Securities and Portfolio risk Or Problem Solving
‐ Diversification HBR Introduction to Portfolio
‐ Relationship between Risk and Return Theory

HBR Leveraged Betas and the

Weighted Average of Working Capital Cost of Equity (HBS note) Lecture, Discussion and
14 ‐ Capital Asset Pricing Model (CAPM) Problem Solving
‐ Cost of Equity and Cost of Debt HBR Case: Beta Management
Company
 HBR Note on the Theory of
Optimal Capital Structure (note)
Leverage and Capital Structure:
‐ Leverage and Firm- Value HBR Article: How Much Debt Lecture, Discussion and
15-16 ‐ Modigliani-Miller propositions I and II Companies Need (HBR) Problem Solving
‐ Capital Structure and Risk and Returns
‐ Market Efficiency HBR Case: MCI Communications
Corp.--1983

Lecturer Notes
Dividend Policy Lecture, Discussion and
17 ‐ Dividend Decisions and Firm Value HBR Case: Dividend Policy at Problem Solving
Linear Technology

Lecture, Discussion and

HBR Article: The Finance Function
18 The Finance Function in a Global Corporation. Problem Solving
in a Global Corporation

*Faculty may use appropriate cases/assignments/readings, comparable with syllabus standards

2.3. Student Assessment:

Assessment Type When assessed Weightage Learning Outcomes Assessed

Mini Project (Group Based) At the end of the 20 Have knowledge about time value of money
The students will be given a recent course and its application (b)
article on Capital Budgeting. They
will have to search for similar
articles from different journals and
will have to analyse the different
capital budgeting practices in
vogue. (should be minimum 2500
words)
Assignments On Going 20 Evaluate critically the role of corporate
finance in business decisions (a)
The skills for financial decision making
relating to capital structure, financial
planning, dividend policy, investment
decisions (d)

Mid Term Test Session 11 20 Learn various financing methods – both short
term and long term (c)
Examination End Term 40 Evaluate critically the role of corporate
finance in business decisions (a)
Short Term Financial Planning and strategic
importance of working capital (c)
The skills for financial decision making
relating to capital structure, financial
planning, dividend policy, investment
decisions (d)

2.4 Prescribed and Recommended Texts

1. Finding Meaning in Financial Statements: A Look Behind the Numbers (HBP Book Chapter)
2. Note on Financial Forecasting
3. Exercise: Note on Financial Forecasting, Problems (HBP)
4. Case: Tire City, Inc.
5. Note on Cash Budgeting / Cash Management (HBP)
6. Case: Hampton Machine Tool
7. Article: The Magic of Managing the Balance Sheet : How to Manage Working Capital
8. Case: Dell’s Working Capital
9. Note: Present Value: A Note on Personal Applications
10. Note on Bond Valuation and Returns
11. Note: Basic Ratio Analysis and Equity Valuation
12. Note: Introduction to Accumulated Value, Present Value, and Internal Rate of Return
13. Case: Alternative: Valuing Capital Investment Projects
14. Case2: Ocean Carriers
15. Note: Diversification, the Capital Asset Pricing Model, and the Cost of Equity Capital
16. Introduction to Portfolio Theory
17. Leveraged Betas and the Cost of Equity (HBS note)
18. Case: Beta Management Company
19. Note on the Theory of Optimal Capital Structure (note)
20. Article: How Much Debt Companies Need (HBR)
21. Case: MCI Communications Corp.—1983
22. Case: Dividend Policy at Linear Technology
23. Article: The Finance Function in a Global Corporation