Corporate Finance Essentials

Suveeksha
DrBhavesh Joshi
Umesh-sir1
directorit
Last Update March 25, 2021
3 already enrolled

About This Course

Finance, directly and indirectly, not only affects the shareholders but also the stakeholders who are interested in the financial performance of the firm. Hence it is the art and science of managing the financial resources available with the firm in the most efficient manner today and plan effectively to raise in future from the market.

This course enriches the learner’s capabilities in understanding the nuances of finance while understanding the theory of finance and integrating its knowledge with the practice in evaluating its investment, financing and dividend decisions. it balances the short term objectives of the firm with the long term goals with sustainable development.

Learning Objectives

This course helps the participant in identifying the issues concerning the management of financial resources. Acquiring skills to determining risk, measure a firm’s risk and how this affects the value of a firm differentiates this course. Learner will be able to appreciate the relevance of time while calculating investments or determining payments at present and in future.
At the end we expect him to realize and apply tools and techniques to enhance firm’s financial performance and be able to use financial analysis for effective decisions of future.

Requirements

  • Internet connection and a zeal to unlearn-relearn in the contemporary business environment

Target Audience

  • Students and practitioners

Curriculum

33 Lessons30h

Corporate Financial Objectives and Functions

Financial resources strategically add to the armor of strategic decision maker. Objectivity of corporate finance is to identify the issues concerning the management of financial resources to be more effective and efficient with them. The firm’s financial performance can be enhanced with the sound understanding of finance concepts and applying them for creating wealth in future while increasing the profit at present.
Quadrant 1: Video01:03:13
Quadrant 2: PPT Corporate Financial Decisions00:00:00
Quadrant 3: FAQ00:00:00
Quadrant 4: Assignment/ Quiz00:00:00

Financial Statements: Profit and Loss Account, Balance Sheet, Cash Flow Statement

Financial statement analysis and evaluating them helps the financial decision makers take sound decisions backed by data. This data is available in the financial statements, but to use them effectively requires understanding and interpreting this data to yield information of utmost importance hidden in these numbers. In this session we will discuss the basic nature of financial statements.

Creative Accounting and Implications

Creative accounting is also referred as aggressive accounting, innovative accounting or window dressing. Its the imaginative ways in which the accounts can be presented. These ways are not illegal, they may deviate from the spirit of accounting laws for making the company appear financially healthier than the reality of it. This session deals with issues concerning this and taking it into consideration while taking financial decisions.

Ratio Analysis

Financial statements contain information that can be utilized to take decisions, while balancing between the risk associated with the projects and the return expected from such investments. Financial ratios form an important part of this information in analyzing actual and the planned financial performances to bridge the gaps in future. In this session we will discuss in detail about the various categories and types of financial ratios.

Time value of money

Financial decisions taken today are based on the past returns on the investments, but ensuring the past returns is not feasible, due to the ever changing market conditions. Time value of money concept -which deals with the future value and present value, act as the building blocks while taking financial decisions including trade-off between the risk and return. In this we will be using the excel sheets to calculate the Time value of money and its application in Net Present Value and Internal Rate of Return.

Capital Asset Pricing Model, Arbitrage Pricing and Portfolio Theory

In this session we will discuss about the risk and return, more effectively with the investments, measuring risk and exploring the risk-return relationship. These are understood better with the theoretical foundation set by the Capital Asset Pricing Model (CAPM), Arbitrage Pricing and Portfolio Theory and their application in the business world.

Risk and Return

Risk associated with an investment is the deviation between the expected and the actual return.The trade-off between risk and return takes an important place in portfolio. In this session we will be calculating the beta, with an excel sheet and data taken from the stock exchange.

Valuation of Stocks and Bonds

An organization exists with perpetuity while balancing between profit maximization and wealth maximization of its shareholders. Valuation is an integral part of any financial decision maker and decisions are taken differently by different users as per their requirement. So which is more effective book value or the market value for making financial decision? This valuation process helps in establishing efficient set of corporate goals while evaluating the effectiveness of such decision criteria. In this session we will take into consideration the valuation of financial assets: stocks and bonds.

Capital Structure Theories and Applications

This session takes into consideration for understand the theoretical controversy about capital structure and the value of the firm. We will highlight the differences between the Modigliani–Miller view and the traditional view on the relationship between capital structure and the cost of capital and the value of the firm. Also focus on the interest tax shield advantage of debt as well as its disadvantage in terms of costs of financial distress. Here we will be understanding how beta is related to capital structure and the cost of capital.

Cost of Capital and Valuation of the Firm

In the capital budgeting technique alternative investment measures are used to evaluate the acceptability of a project, in this cost of capital plays a pivotal role. It may be the required rate of return which changes with the normal risk to complicated risk with the nature of the business in which it operates. It is the application of CAPM in determining the cost of equity capital based on the systematic risk and other factors which determines the cost of capital.

Corporate Investment Decisions: Estimation of Cash Flows and Analysis Techniques

Cash flow generated from a business activity can be distributed among the existing shareholders, it can be utilized to acquire new assets or it can be retained for future financial decisions. Seemingly it may be easy but strategically it had long term implication on the financial health of the organization. So at this juncture the finance manager is expected to be precise about the estimation of the cash flows to be more effective while making such financial decisions. In this session we will be discussing more about the methods and analysis techniques for estimating cash flows.

Working Capital: Monitoring, Planning and Control

For a manufacturing firm, current assets exceed one-half of total assets, what are the trade offs involved in the decision of how much inventory the firm should carry? Excessive levels can result in a substandard Return on Investment (ROI), so in what way does the cash manager face a similar trade off? Working capital management affects the company’s risk, return, and share price and it requires continuous, day-to-day managerial supervision for taking sound working capital decisions. In the following sessions we will elaborate more on these topics while monitoring, planning and controlling the working capital.

Cash Management

Cash being the lifeblood of a business entity. availability of cash is desired to acquire equipment, supplies, resources for the smooth functioning of the production units to generate products and services while maintaining the liquidity. Balancing between cash and marketable securities helps in providing short-term investment outlet for excess cash and are important for meeting the planned outflow of cash .

Receivable Management

Businesses operates on accrual concept where the transactions made are on cash as well as on credit too. For this the organization needs to have a sound receivable management policy decision which balances between the cash requirement of the organization without impacting the sales. For having an optimal receivable or credit policy it should be a balance between the cost and benefits associated with it. In this session we will be evaluating the techniques employed by a company in determining an optimal credit policy.

Inventory Management

Essential Features of Inventory Management includes decisions about the optimal inventory levels involves a trade-off between carrying cost and order costs. As carrying costs include the cost of storing goods as well as the cost of capital tied up in the inventory so inventory management decisions are to be taken with utmost care as it impacts on the financial position of the firm. So these decisions helps firms maintain some minimum level and then replenish them by ordering a pre-determined quantity. In this session we will discuss the techniques adopted by firms for inventory management and implementing it as a strategic decision.

Working Capital Finance

Decisions like maintaining of cash balances, investment in securities, payment of short term liabilities and other such decisions where firm's short term assets are funded and liabilities are created fall under the domain of short-term financing. In this session we will be discussing the major sources of short-term financing available with the firms, costs associated with such decisions and the techniques adopted by firms for its being the minimum cost as part of current liabilities.

Dividend and Valuation

Financial resources with firms are to be utilized judicially, because the same funds can be used for paying it to the existing share holders as dividend but at the same time funds get reduced which can otherwise could be used for acquiring new assets. Hence firms dividend decision is about the balancing between such decisions. It gets complicated because its interwoven with the corporate financial policy. In this session we will discuss more about the dividend policy and its impact on the valuation of the firm.

Determinants of Dividends Policy and Dividend Policy of Companies

Cash plays a pivotal role in the life of a firm, but its availability and distribution is something which a finance manager had to handle with utmost care as the investors associated with the firm had different motives behind investments in the firm, ranging from short term (profit maximization) to long term (wealth maximization). So how much should be distributed as cash with the share holders so that it keeps them invested with them and attract such investors in future, without impacting on the valuation of the firm? We will discuss such issues of concern in detail in the following sessions.

Bonus Shares (Stock dividend) and Stock (Share)

Corporate actions of a firm impacts on the share valuation and share prices in the open market. Balancing between the share prices and availability of stocks with the share holders is a decision which had a long term impact. So organizations need to decide between cash dividend and bonus shares, how these decisions impact on the firms in short run and long run? We will be discussing it in the following session.

Legal, Procedural, Tax Aspects associated with Dividend Decisions

Companies Act – 2013 had set certain norms towards the payment of dividend to the entitled shareholder. There are many such legal, procedural and tax related concerns associated with the dividend decision. This session is dedicated to this broad topic dealing with such issues and concerns of a financial decision maker while taking dividend decisions.

Your Instructors

DrBhavesh Joshi

Professor

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IIM Ahemdabad alumnus, Doctorate in Commerce, Masters Degree in Business Administration and M. Phil (Management)
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directorit

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Free
Level
All Levels
Duration 30 hours
Lectures
33 lectures
Subject
Language
English

Material Includes

  • PDF, PPT, Excel Sheets, Videos and Word documents to enhance learning of participant
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