Number of credits
Language(s) of instruction
Organisation and examination
Teaching in the first semester, review in January
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 is structured into three blocks composed of theoretical lectures (one groupe made of all students, Tuesdays and some Fridays), "theoretical" exercises sessions (one group, Tuesdays and some Fridays) and practical seminars (students will be split in 4 sub-groups, on Fridays).
The detailed planning can be found below. Dates are indicative and might be subject to changes.
Block 1: Introduction to Corporate Finance (Fundamentals)
- Basics of discounting and valuation (time value of money, effective/nominal/proportional interest rates)
- Review of financial market theory: CAPM, Yield curve, business vs. financial risk
- Alternative investment rules: the Internal Rate of Return (IRR), Payback, Accounting Rate of Return, Profitability ratio
The theoretical lecture is organized on Tuesday 26th September (one group).
The first exercises session (Friday 29th September, one group of all students) will review the main prerequisites for the course (financial mathematics and financial market theory)
Block 2: Financial analysis and Free Cash Flows to the Firm
- Purpose of financial analysis
- Financial statements and applicable adjustments
- Horizontal/vertical common-size statements
- Financial ratios (liquidity, solvability, profitability, efficiency)
- Free Cash Flows to the Firm
The lecture is organized on October 3rd AM (one group of all students). The exercises session on October 3rd PM (one group).
Seminar 1 (6th October, four groups, please check your group) will provide students with the tools to understand the financial fundamentals of a company, its environment and related risks but also to conduct a first financial due diligence.
Block 3: Capital Budgeting and Firm Valuation
- Determination of the Free Cash Flows to the Firm and forecasts
- Weighted average cost of capital
- Effect of leverage and capital structure
- Finite and infinite life analysis
- Market approach and income approach (Discounted Cash Flow)
The theoretical lecture is organized on October 10th AM (one group of all students). The exercises session on October 10th PM (one group).
Seminar 2 (13th October, 4 groups) will provide students with the tools to prepare a business plan. Seminar 3 (20th October, 4 groups) will provide students with the tools to evaluate a company using the Discounted Cash Flow method (income approach).
One lecture will be organized on October 27th (one group) in order to make a mid-term review of the material and to introduce students to relative valuation methods (multiple analysis).
Seminar 4 (10th November, 4 groups) will provide students with practical tools for firm valuation using the multiples analysis. Seminar 5 (24th November, 4 groups) will provide students with tools to evaluate capital budgeting decisions.
The course of 8th December (one group made of all students) will wrap up the competences 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 15th December.
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.
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 collecting 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 will be covered on September 26th (PM) and on Friday 29th September (AM) during the first exercises session. Attendance to these sessions is recommended.
Planned learning activities and teaching methods
The course is structured into three 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 above in the "Content" Section. Dates are indicative and might be subject to changes.
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 and 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@.)
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 26th (PM). All practical information will be provided during the first course (textbooks, schedule, groups). Attendance is strongly recommended.
- Exercises sessions are scheduled on Tuesdays (PM) and Fridays (please refer to the schedule above, starting on September 29th onwards) - For the seminars, groups will be formed end of September. 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) at the start of the course (and no later than mid October, after this date, groups will be definitive).
- An additional Questions and Answers session on Friday 15th December might 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 when asking a question by email.
Recommended or required readings
- Hillier, Grinblatt and Titman, Financial Markets and Corporate Strategy, McGraw-Hill, Second European Edition
- Equity Valuation, CFA Institute
For the prerequisites, please see supra. Chapters covered in class will be announced in class.
These readings will enable students to deepen their understanding of the key concepts seen throughout the course. Students' understanding will be tested at the written exam.
Financial Statement Analysis: An introduction by Elaine Henry, CFA, and Thomas R. Robinson, CFA
Financial Reporting Mechanics - International Financial Statement Analysis, by Thomas Robinson, CFA, Jan Hendrik van Greuning, CFA, Elaine Henry, CFA and Michael A. Broihahn, CFA
Financial Reporting Standards by Elaine Henry, CFA , Jan Hendrik van Greuning, CFA, and Thomas R. Robinson, CFA
Understanding Income Statements by Elaine Henry, CFA and Thomas R. Robinson, CFA
Understanding Balance Sheets by Elaine Henry, CFA, and Thomas Robinson, CFA
Understanding Cash Flow Statements by Elaine Henry, CFA and Michael A. Broihahn, CFA
Financial Analysis Techniques by Elaine Henry, CFA, and Thomas R. Robinson, and Jan Hendrik van Greuning, CFA
Inventories by Michael Broihahn, CFA
Long-lived Assets by Elaine Henry, CFA and Elizabeth A. Gordon
These readings will enable students to deepen their understanding of the prerequisites for the course: Financial Reporting and Analysis.
The course material (slides, case studies and exercises) will be available on the course web page on lol@: http://lola.hec.ulg.ac.be
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 sessions (after approval by Professor Marie Lambert - justification received before November 15th, 2017), 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".
The same conditions apply for the retake in August.
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.
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 15th.
Students are invited to check the lol@ platform on a regular basis for any practical information regarding the course or any schedule change.
Marie Lambert - Professor at HEC - email@example.com
Joachim Davoli - firstname.lastname@example.org
Maxime Ledent - email@example.com
Student instructors :
Antoine Hogge - firstname.lastname@example.org
Hien Thi Thu Nguyen - email@example.com