Business Finance - IIEI-300

Course Description: This six-week course provides an introduction to business financial analysis. The many facets of corporate finance, including financial management, measuring financial performance, financial forecasting, budgeting, financing methods, financial risk and financial planning are examined as the student applies the principles and practices of finance to maximize shareholder value.

Prerequisite: Business Accounting Concepts (IIEI-230) strongly suggested.

Course Credit: 3 Credit Hours

Major Course Topics & Course Outcomes

As a result of the group and individual activities included in this course, the student will acquire the following knowledge and skills that can be applied to the workplace:  

Functions of Financial Management 

• Comprehend the general goals and functions of financial management
• Evaluate the relationship of risk to return

Financial Planning

• Understand the basic accounting mechanics of financial analysis
• Construct an Income Statement, Balance Sheet and Statement of Cash Flows

Financial Analysis

• Compute and utilize the key ratio analysis useful in financial analysis
• Carry out financial planning using the most common financial tools
• Calculate the Break-even point for a business

Financial Forecasting

• Know the three financial statements used for forecasting
• Identify the future funds usage to meet forecast needs
• Understand the impact of seasonal and other effects on cash flow

Working Capital Management

• Demonstrate an understanding of the decision process in determining working capital requirements and financing
• Comprehend the term structure of financing

Current Asset Management

• Know the principles of cash management
• Assess the impact liquidity on financial decision making and the associated risks

Short-term Financing

• Know the sources of short-term financing
• Establish the value and risks of various sources of financing

Capital Budgeting Process

• Financially demonstrate an understanding of the time value of money
• Understand the value of determining the marginal cost of capital
• Calculate and value the rate of return on an investment decision

Valuation and Rate of Return

• Calculate and value the rate of return on an investment decision
• Analyze the cost of capital

 Cost of Capital

• Assess how the cost of capital represents the cost of financing the firm
• Determine the cost of capital

 Capital Budgeting - Long Term Financing

• Know the sources for long-term financing
• Evaluate the three methods of ranking investments

Risk and Capital Budgeting

• Understand that risk is based on the concept of uncertainty of future events
• Know why high risk determines high rate of return

 Capital Markets

• Understand the role of security markets in meeting the financial needs of business
• Demonstrate an understanding of shareholder value using common and preferred stock as a financing mechanism.
• Analyze how organizations set their stock dividend policy based on the principle of marginal rate of retained equity.

Course Materials:

There is one textbook for this course.

Foundations of Financial Management. 12th Edition. Block, S.B. and Hirt, G.A.. Irwin/ McGraw-Hill, Boston, MA  (2006) ISBN 0073295817