FINA0050-1

Duration

30h Th

Number of credits

	Master in management, professional focus in law and management	5 crédits
	Master in management, professional focus in law	5 crédits
	Master in management (120 ECTS)	5 crédits
	Master in business engineering (120 ECTS)	5 crédits
	Master in management (60 ECTS)	5 crédits

Lecturer

Marie Lambert

Coordinator

Marie Lambert

Language(s) of instruction

English language

Organisation and examination

Teaching in the first semester, review in January

Schedule

Schedule online

Units courses prerequisite and corequisite

Prerequisite or corequisite units are presented within each program

Learning unit contents

The course of "Corporate Finance" lays the theoretical and practical foundations for valuing firms and corporate investment projects as well as for dealing with short-term and long-term financing decisions.

The course starts with a general introduction about Corporate Finance. With the objective of maximizing firm value, the course will address the following key questions:

In what long-lived assets should the firm invest? Capital budgeting/Investing decisions
How can the firm raise cash for its required capital expenditures? Financing decisions and capital structure
How should short-term operating cash flows be managed? Timing of cash flows and short-term financing decisions

The course is structured into eight blocks. For each block, we organize lectures, exercices sessions and seminars (see "Planned learning activities").

Block 1: Introduction to Corporate Finance (Fundamentals)
Basics of discounting and valuation (time value of money, effective/nominal/proportional interest rates)

Block 2: Financial analysis

Financial statement analysis
Financial statements and applicable adjustments
Horizontal/vertical common-size statements
Financial ratios (liquidity, solvability, profitability, efficiency)

Block 3: Free Cash Flows to the Firm

Cash flows available for both providers of capital

Block 4: Cost of capital

Review of financial market theory: CAPM, Yield curve, business vs. financial risk

Cost of equity, cost of debt
Capital structure
Debt tax shield

Block 5: Discounted Cash flow
Income approach: Finite and infinite life

Block 6: Firm valuation
DCF : Infinite life analysis

Effect of leverage and capital structure
Weighted average cost of capital
Determination of the Free Cash Flows to the Firm and forecasts

Market approach

Introduction to multiple analysis (relative valuation)

Block 7: Capital Budgeting

Finite and infinite life analysis
Net Present Value (NPV)
Determination of the Free Cash Flows to the Firm and forecasts
Weighted average cost of capital
Effect of leverage and capital structure

Block 8: Alternative investment rules
Alternative investment rules: the Internal Rate of Return (IRR), Payback, Accounting Rate of Return, Profitability ratio

Learning outcomes of the learning unit

Consistently with the Key Learning Outcomes (KLO), students will develop the following individual capacities:

(1) Students will be able to execute the financial management of a company.

(1.1) They will acquire the fundamental knowledge and understanding in financial management to perform a rigorous analysis of a management problem such as an investment project, a firm valuation or (short-term, long-term) financing decisions.

(1.2) Especially, they will (i) compute and forecast cash flows used for project or firm valuation (ii) estimate the prevalent cost of capital to be used to discount cash flows (iii) compute the Present Value of an investment project or a firm (iv) value business acquisition opportunities and (v) make a deep analysis of the working capital needs of a firm .

(2) They will learn how to establish a strategy to answer concrete complex and transversal financial management problems by applying modelization tools and by making use of market data.

(3) They will strengthen their communication skills in business related problems and in English and develop a transversal view of a financial management problem to adapt their management practices in the specific context of a firm or project valuation and financing.

Prerequisite knowledge and skills

The course will extend students' knowledge acquired during an initial bachelor's degree in management. The course therefore requires basic knowledge in financial mathematics, financial analysis and reporting (see infra) and financial markets. As a prerequisite, students are invited to read Chapters 2,3,4,5 and 23 of Hillier, Grinblatt and Titman, Financial Markets and Corporate Strategy (second European edition).

Review of the prerequisites in financial market theory and financial analysis will be covered during the introductory lecture, the Block 2 on financial analysis and Block 4 on the WACC.

Planned learning activities and teaching methods

The course is structured into eight blocks composed of theoretical lectures (all students, Tuesdays and some Fridays), "theoretical" exercises sessions (all students, Tuesdays and some Fridays), and practical seminars (in 4 sub-groups, on Fridays).
The detailed planning can be found on lol@ in the introduction slides. Dates are indicative and might be subject to changes.

The course is structured into lectures, exercises sessions and seminars.

Lectures and exercises sessions
Lectures will transfer to students the theoretical knowledge and the practical tools for solving complex investment and firm valuation problems. Students are expected to participate to class and to read the related chapters in the textbook. Exercises sessions will be organized on each module.
Lectures on Blocks 1 to 8 will be organized on Tuesdays (09/18,09/25,10/2) and on Fridays (10/26, 11/30).
Exercises sessions: Blocks 1 to 6 (10/9), Block 7 (26/10) and Block 8 (11/30)
Remediation
The course of 14th December (one group made of all students) will wrap up the competencies acquired during the lectures, exercises sessions and seminars. It will gather exercices to prepare for the exam. One final Q&A session will be organized on 21st December.

Seminars
Practical case studies will enable students to test their capacity to research autonomously and methodically the information needed to solve a transversal management problem and to test their capacity to use modelization tools to propose rigorous solutions to complex financial management problems. Students will receive guidance to work on the case studies and will have to work in groups through distance learning and submit their work on lol@ on due dates (by following the instructions received on lol@.)
Seminars occur on Fridays. Students are split in groups. Tentative dates are provided in parentheses.
Seminar 1 on Block 1 will provide students with the tools to understand the financial fundamentals of a company and to conduct a first financial due diligence. (09/21)
Seminar 2 on Block 2 will provide students with the tools to prepare a business plan. (09/28)

Seminar 3 on Block 3 will provide students with the tools to evaluate the cost of capital of a firm or of a project. (10/05)

Seminar 4 on Blocks 4 to 6 will provide students with practical tools for firm valuation (Blocks 7 and 8).(10/19)

Seminars 5 and 6 will provide students with tools to evaluate capital budgeting decisions (first in finite life and then in infinite life). (11/09 and 11/16)

During the seminars, students will work in groups on case studies. Homeworks will be asked to students in order to prepare the session or finalize the work started during the seminar. The students should bring their laptop to the seminar and check their group and schedule on lol@.

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Remarks : This planning is subject to changes. Any change with regard to this planning will be announced on the online platform lol@
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Mode of delivery (face-to-face ; distance-learning)

The course is composed of face-to-face lectures and exercise sessions. Exercise sessions and case study analyses will be prepared through distance learning.

Lectures start on September 18th (AM). All practical information will be provided during the first course (textbooks, schedule, groups). Attendance is strongly recommended.
Exercises sessions are scheduled after each lecture.
For the seminars, groups should be formed before September 21st. You will be asked to enroll into one group. Please check your group number and schedule. In exceptional cases, changes from groups will be allowed.
Attendance to the right seminar or exercises session (i.e. corresponding to your group number) is mandatory and will be controlled and graded into your participation grade (see infra). Should you have an overlap with another course, please contact Maxime Ledent (contact details below) as soon as possible.
An additional Questions and Answers session on Friday 21st December will be organized to answer the last questions you might have regarding the exam before the winter holidays. You will be asked to enroll on lol@ to this session.
Except in case of technical problems, a collaborative platform will be used during the course in big group for promoting interactions and questions. Surveys at the end of the course will also be organized periodically to gather information about the students' learning progress and to detect any understanding problems.
Self-assessment quizzes will be available on lol@ in order to train for the exam (Multiple choice questions)
One forum will be set up on lol@ and animated by the assistants (Maxime Ledent and Joachim Davoli). Students will receive answers to their questions at the latest on Thursday of week Y for questions asked before Friday of week Y-1. Students are asked to make use of the forum to ask questions regarding the course rather than emails. They will be automatically redirected to the forum.

Assessment methods and criteria

Students' final grade for the course is composed of an evaluation of students' engagement during the course (20%) and of a final evaluation (80%).

The final written exam will assess students' understanding of concepts linked to investment's project and firm valuation as well as students' capacity to solve problems. This will make up 80% of their final grade.

Active class participation will make up 20% of the student's grade: students will be assessed on their attendance to Friday's sessions (10%) as well as on their class preparations submitted on lol@ (by group, 10%). When requested, exercises and case studies will have to be done and submitted on lol@ before the session. Submission by email will not be graded. Students have to check regularly lol@ for the deadlines of the assignments.

Relative weighting of individual assessment: 90%

Students who fail the January exam or do not present themselves at the exam will have to retake the exam in the second session organized in August/September. There is no intermediary session.
In case a student has justified absences for more than half of mandatory Friday's seminars (after approval by Professor Lambert - justification received before October 15th, 2018), the final exam will count for 100% of their grade. In case of justified absence for less than half of the Friday's sessions, students must remit a certificate to the teaching assistants. Only absence justified through certificates (no emails) might be considered as "Excused" (emails are not sufficient).
The same conditions apply for the retake in August.

Exam visit
Students have the right to review their exam copy after the publication of the results. The student has to contact the Professor within max. the two weeks following the announcement of the results. The meeting with the student should be organized within the month of the release of the result.

Work placement(s)

None

Organizational remarks

Students have the opportunity to ask questions on the material during the class and at the end of each session. A final Questions and Answers session will be organized on December 21st.
Office hours will be organized with the teaching assistants.
Students are invited to check the lol@ platform on a regular basis for any practical information regarding the course or any schedule change.

Contacts

Professor

Marie Lambert - Professor at HEC - marie.lambert@uliege.be

Teaching assistants:

Joachim Davoli - joachim.davoli@uliege.be

Maxime Ledent - maxime.ledent@uliege.be

Corporate Finance - Lectures and Seminars