GCER2113-2

Duration

30h E-Lrng

Number of credits

	Executive Master of Business Administration (Certificate organised abroad)	3 crédits
	Executive Master in Finance (Certificate organised abroad)	3 crédits

Lecturer

Language(s) of instruction

English language

Organisation and examination

All year long

Schedule

Schedule online

Units courses prerequisite and corequisite

Prerequisite or corequisite units are presented within each program

Learning unit contents

Corporations create value for their shareholders by making good real investment decisions. The objective of this course is to define what good investment decisions are, and how to value investment projects. Several objectives could be pursued. The objective function of a private business firms is to maximize the stockholder's wealth, which implies to maximize the firm value and to protect debtholders from bankruptcy. The shareholder maximization objective is thus much more restrictive than the maximization of the enterprise value. Publicly traded firms pursue an even more restrictive objective by receiving instantly the feedback from the market on their business decisions.
Corporate finance theory deals with all the decision that a business can make and that could have an impact on its value. Every decision that a business makes has financial implications, and any decision which affects the finance of the firm is a corporate decision. The objective that will be followed in this course is the firm value maximization. Two methods of firm valuation will be covered throughout the course: the income approach or Discounted Cash Flow method and the market approach based on multiples analysis.
Corporate finance deals with the following 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)
How should the distribution of cash to shareholders be managed? (Dividend policy and stock repurchases)

This course mainly addresses the first question "Capital Budgeting" -which concerns the left-hand side of the balance sheet: the investment in real long-lived assets- and partially covers the management of short-term operating cash flows. Real investments like factories and machines are expenditures that generate cash in the future. Contrary to financial investments, their market values are not readily available on an exchange market. The challenge is therefore to borrow tools from market theory in order to derive the market values of those assets and compare them to their investment costs. A good investment decision will be defined as an investment that costs less than its market value and therefore where a bargain can be made. The management of short-term operating cash flows require a good monitoring and measurements of the cash conversion cycle of the firm.

Learning outcomes of the learning unit

At the end of the course, students will acquire the fundamental knowledge and understanding in financial management to perform a rigorous analysis of a capital budgeting problem.
Students will be able to:

Compute and forecast cash flows used for project or firm valuation;
Estimate the prevalent cost of capital to be used to discount cash flows;
Compute the Present Value (PV) of an investment project or a firm.
Monitor short-term operating cash inflows and outflows.
Perform a relative firm valuation.

Prerequisite knowledge and skills

Accounting and portfolio theory

Planned learning activities and teaching methods

Ebook including video tutorials and online quizzes

Mode of delivery (face to face, distance learning, hybrid learning)

Distance learning

Work placement(s)

Organisational remarks and main changes to the course

Contacts

Professor Marie Lambert: marie.lambert@uliege.be

Corporate Finance