06300398 - Principles of corporate finance

Crédits ECTS 6
Volume horaire total 39
Volume horaire CM 24
Volume horaire TD 15

Responsables

Objectifs

The lectures have a strong focus on financial analysis and its relation to coporate finance. The aim is to provide students with theory and practice. Throughout the lectures, real world case studies and excercises are extensivley used for illustration pourposes. Group work and discussion are encouraged.

The module has the aim of giving students the confidence to apply and develop their financial understanding of published accounts and the skills and abilities required to interpret financial information in an international context.

TARGETED KNOWLEDGE
1. Analyse financial statements and understand accounting principles
2. Recall the concept of value in corporate finance
3. Categorise capital structure policies
4. Reproduce financial management techniques

TARGETED SKILLS
  • Know where to look for financial information
  • Select investment decision rules (eg. NPV)
  • Calculate the WACC
  • Calculate DCF and multiples valuation

Contenu

1. Financial analysis
1.1 Fundamental concepts in Financial analysis
1.2 Financial analysis and forecasting

2. Investors and markets
2.1 Investment decision rules
2.2 The risk of securities and the required rate of return
2.3 Financial securities
3. Value
3.1 Measuring value creation
3.2 Cost of capital
3.3 Valuation techniques

4. Capital structure policies
4.1 Debt equity and options theory
4.2 Equity capital
5. Financial management
5.1 Corporate governance and financial engineering
5.2 Managing cash flows, working capital and financial risk

This module aims to provide students with the ability to interpret accounting information and an understanding of the strategies that are taken by organisations to maximise shareholder wealth. Strategies that improve liquidity and minimise risk will be critically examined and applied. The particular problems facing organisations that trade internationally will be explored. It will show how to apply theories of finance to a variety of practical situations and enable the student to gain practical experience of research and analysis in a financial strategy context.

While financial theories are covered in the course the emphasis is on the practical application of the models encountered. The course leader will enable students to become financially literate in order that they can gain confidence in their understanding of finance and financial statements so that they can contribute to high level discussions on financial matters.

Students will form groups of 3 or 4. They will examine the Financial Statements of a French or international company and give advice to a potential investor. The group coursework will enable students to make practical use of the material learned in class to explore specified areas in dept. They will learn through discussion of their own ideas, and will be expected to assess the value and limitations of accounting information. In order to complete this assignment the coursework requires that a comparator company must be chosen (i.e. a company in the same industry sector so that comparisons can be made). The majority of the marks for this coursework will be given on the basis of the quality of the research carried out and how well the group's advice is supported by the research.

Bibliographie

BOOKS USED AS REFERENCE:
  • Vernimmen, Pierre, et al. Corporate finance: theory and practice. John Wiley & Sons, 2014.
  • Arnold G Corporate Financial Management, London, Financial Times Prentice Hall 5th Edition (2013)
  • Damodaran, Aswath. Corporate finance. Wiley, 1996.
  • Berk, Jonathan B., and Peter M. DeMarzo. Corporate finance. Pearson Education, 2007.

ADDITIONAL READINGS :
  • Tirole, Jean. The theory of corporate finance. Princeton University Press, 2010. (Only for those who want to deepen their knowledeg on financial theory)
  • Watson, D & Head, A (2013), Corporate Finance, 6th Edition, FT/Prentice Hall
  • Fraser L.M. and Ormiston A. Understanding Financial Statements Pearson 2010
  • Hopper T, Northcott D and Scapens R (2007) Issues in Management Accounting, London, Financial Times Prentice Hall
  • Martin J and Titman S (2008) Valuation: the Art & Science of Corporate Investment Decisions, Boston, Pearson Addison Wesley
  • Copeland T, Koller T and Murrin J (2000) Valuation: Measuring and Managing the Value of Companies, New York,John Wiley
  • Collier, PM Accounting for Managers; Wiley (2012)
  • Rutterford, J , Upton, M and Kodwani, D (2006) (Eds) Financial Strategy, London: John Wiley
JOURNALS:
Management Accounting Research
Management Accounting
Journal of International Financial Management and Accounting
Financial Times
The Economis

Contrôles des connaissances

Final Exam
Written (2h)
Type of examination: Exercises and a small case study

Continuing Examination
Written Exam
In class Examination
Students will have to write a financial analyst note and present it in class.

Informations complémentaires

TEACHING METHODS
A mixture of lectures and seminars - run on a workshop style - will be used to introduce the topics and techniques. These topics and techniques will be explored further through the use of numerical examples and discussion. Case studies and videos will be used where appropriate and relevant. All relevant module information, required reading, lecture overheads, seminar questions etc are made available to the students.

PREREQUISITE
There are no prerequisites for this course. However, a general interest in the world of economics and finance is very useful

ADDITIONAL READINGS:
Vernimmen, Pierre, et al. Corporate finance: theory and practice. John Wiley & Sons, 2014.