Fundamentals of Corporate Finance Certificate

Overview

What is Corporate Finance? Corporate finance is an area of finance that focuses on the financing and value of corporations including capital allocation, asset financing and increasing value for shareholders. Functions of corporate finance include obtaining funds through the issuance of securities, managing capital, analysis of potential mergers and acquisitions and determining dividends paid to shareholders. The ultimate goal of the corporate financial manager is to maximize the value of the firm. Jobs in Corporate Finance Corporate finance analysts are in high demand due to their role in defining the strategic direction of a firm. The corporate finance officer will analyze complex financial transactions and identify opportunities for growth, working with the CFO and other executives. If you’re just starting out, look for corporate finance internship opportunities to get your foot in the door. As an intern or associate analyst, you will support key financial decisions with research, analysis and recommendations. Even in an entry-level position, you will find yourself influencing major decisions at the company. While most major companies employ corporate finance specialists, banks are major employers. Look for positions for corporate financial analysts and planners at JP Morgan Chase and other large financial institutions. Explore a Career in Corporate Finance Enrol in an introductory course on the principles of corporate finance and see if a career in this exciting area of finance and investing is right for you. Online finance courses are available to teach you the fundamentals and take you much further on this in-demand career path. Specific Objectives Chapter by Chapter Chapter 1 – Some Introductory Concepts After completing this chapter, you will be able to:

• Distinguish accounting from finance in terms of its focus or goals
• Decompose different markets that make up the broader financial market
• Identify five important truth’s related to finance
• Compare and contrast the Liquidity Preference as it relates to investors
• Recognize how a Yield Curve will change in relation to time and interest rates

Chapter 2 – Financial Planning and Forecasting After completing this chapter, you will be able to:

• Initiate the forecasting process
• Apply the percentage of sales method to forecasting
• Distinguish the two main costs in a forecasted Income Statement
• Relate a sales forecast to changes in current assets
• Calculate the External Financing Needs of a company per the Pro Forma Balance Sheet
• Calculate the External Financing Needs based on three critical changes
• Organize and report a Sales Budget in the form of a simple table
• Calculate cash receipts from accounts receivable collections
• Calculate and present the Production Budget in terms of a table
• Forecast material and labour costs

Chapter 3 – Managing Working Capital After completing this chapter, you will be able to:

• Distinguish the components that makeup working capital
• Determine the minimal cash balance you should carry in a business
• Identify the two important strategies for managing cash
• Calculate the minimal level of cash using the Baumol Formula
• Identify important control practices for managing your accounts receivable
• Calculate your investment in receivables
• Calculate the Economic Order Quantity for your inventories
• Calculate the Re-Order Levels for inventories
• Segment your inventories into three groups
• Recognize the key components that comprise a Supply Chain

Chapter 4 – Short Term Financing After completing this chapter, you will be able to:

• Apply for Trade Credit as a means of immediate financing
• Calculate the Annual Financing Cost of Ordinary and Discounted Loans
• Distinguish how financing costs change when a compensating balance is involved
• Identify two ways you can use accounts receivable for financing
• Identify three ways you can finance inventories

Chapter 5 – Intermediate and Long Term Financing After completing this chapter, you will be able to:

• Compare and contrast the relationships between risks and levels of debt and equity as it relates to financing
• Apply Annuity Tables for discounting loans
• Calculate monthly loan payments using the Present Value of Interest Factor of Annuity
• Identify two forms of financing equipment
• Identify two approaches to leasing arrangements
• Calculate annual lease payments
• Identify six factors to consider when taking on long term debt
• Distinguish unique challenges related to equity financing in contrast to debt financing
• Calculate Cost of Equity using the Capital Asset Pricing Model

Chapter 6 – Time Value of Money After completing this chapter, you will be able to:

• Calculate the Future Amount of a present amount given a specified rate and time period
• Calculate the Present Amount of a future amount given a specified rate and time period
• Calculate the Future Amount of an Annuity given a specified rate and time period
• Calculate the Present Amount of an Annuity given a specified rate and time period
• Recognize the four principle tables commonly used in discounting

Chapter 7 – Risk Return Concepts After completing this chapter, you will be able to:

• Distinguish expected rates of return from a risk-free rate of return
• Express risk using standard deviation
• Apply diversification to a portfolio of investments
• Apply Beta Coefficients for assessing risk with publicly traded companies
• Distinguish the relationship of risk as it relates to the Coefficient of Variation
• Recognize different risk premiums that investors may include in arriving at their rates of return
• Differentiate between Unsystematic Risk and Systematic Risk

Chapter 7 – Managing Risk with Derivatives After completing this chapter, you will be able to:

• Apply the use Future Contracts in managing the risk of price changes
• Differentiate Hedging from Speculation as it relates to risk management
• Recognize how Arbitrage is used in global markets
• Recognize how Options are used to buy and sell arrangements
• Identify different approaches used for valuing options
• Apply Interest Rate Swaps and Currency Swaps for reducing risks

Chapter 9 – Long Term Investing After completing this chapter, you will be able to:

• Identify the three major activities associated with portfolio management
• Identify nine major steps for conducting a Cost-Benefit Analysis
• Identify costs that should be excluded from your cost-benefit analysis
• Formulate one or more approaches for estimating costs
• Interpret different types of benefits that you may want to include in your cost-benefit analysis
• Devise a process by which you can risk adjust your cost estimate
• Interpret different risk-adjusted values based on confidence intervals
• Identify three important economic indicators for evaluating long term investments

Chapter 10 – Capital Structure and Risk After completing this chapter, you will be able to:

• Evaluate your capital structure in terms of minimizing your costs and how it impacts earnings
• Calculate your degree of operating leverage (DOL)
• Calculate your degree of financial leverage (DFL)
• Calculate breakeven sales volume and dollars

Chapter 11 – Optimal Capital Structure After completing this chapter, you will be able to:

• Apply three ratios for measuring risks – Debt to Assets, Equity to Assets, and Debt to Equity
• Identify three important factors associated with calculating the Cost of Equity
• Apply the Hamada Equation in calculating the Cost of Equity
• Devise an appropriate approach for finding the Minimal Weighted Average Cost of Capital in relation to the market value of a company

Chapter 12 – Private Capital After completing this chapter, you will be able to:

• Distinguish public capital markets from private capital markets
• Identify seven different channels for transferring private ownership
• Identify four levels of valuation by the percentage of ownership
• Identify two important timing issues for cashing out of a private company
• Identify three sources of private equity