The Corporate Finance Course

Understand working capital management as a firm's short-term decisions on current assets and liabilities, ordered by liquidity and including cash, receivables, and inventory.

Explore liquidity management by analyzing primary and secondary liquidity sources, cash flow practices, and factors driving liquidity—drags and pulls, including collect early and pay late—across cash receipts and payments.

Explore liquidity measures with the current ratio and quick ratio, showing how cash, receivables, and inventory affect solvency and interpretation against industry norms.

Learn to calculate and analyze asset management ratios, including accounts receivable turnover and days of receivables, inventory turnover and days of inventory, then compare results to industry norms.

Learn to measure liquidity using the payables turnover ratio and average days payable, calculating purchases from cost of goods sold and inventories to assess financial health.

Analyze a company's liquidity by calculating current and quick ratios, plus days of inventory, receivables, and payables, and compare to industry averages to assess working capital.

Explore the operating cycle and cash conversion cycle, including inventory and receivables days and how average days payable affect cash flow, working capital, and even negative cash conversion cycles.

Learn how firms manage their net daily cash position by forecasting daily cash flow, balancing inflows and outflows, and using short-term securities to invest excess cash while avoiding debt.

Explore how the corporate treasury uses short-term securities to manage working capital, calculating bank discount yield, money market yield, and bond equivalent yield for t-bills and other money market assets.

Explore how a written investment policy statement defines a working capital portfolio’s purpose, permitted securities, roles, and compliance procedures, and guides evaluations of accounts receivable, inventory, and accounts payable.

Track the average days of receivables and use the accounts receivable aging schedule and weighted average collection period to analyze trends, overdue receivables, and policy effectiveness.

Discover how inventory management supports liquidity by keeping enough stock to avoid lost sales. Balance stock to minimize costs, handle seasonality, and compare industry norms for inventory days and turnover.

Analyze how trade credit creates accounts payable, including net 30 and 2/10 net 30 terms, and evaluate when to pay using the effective annual rate.

Compare short-term bank funding sources, including uncommitted, committed, and revolving lines. Learn how collateral, banker's acceptances, and accounts receivable factoring support liquidity.

Evaluate short-term non-bank funding sources like commercial paper, direct and dealer paper, and bankers acceptances, and compare borrowing costs to identify the cheapest option.

Learn how capital budgeting guides long-term investment decisions by generating ideas, forecasting cash flows, planning the company-wide budget, and conducting post-audits to compare outcomes and refine strategies.

Discover how capital budgeting relies on incremental cash flows, ignores sunk costs, accounts for externalities and cannibalization, and uses opportunity-cost, after-tax timing, and conventional versus unconventional patterns.

Explore how to evaluate multiple capital projects in parallel, distinguish independent from mutually exclusive investments, apply sequencing and capital rationing to optimize project portfolios.

Learn to evaluate investments with net present value, IRR, and related measures such as payback, AAR, and PI, applying inflows, outflows, and a discount rate.

Apply net present value in capital budgeting using a $150 million outlay and $70 million annual inflows at 9%, with the example showing a positive NPV and an investment signal.

Learn how the internal rate of return sets the discount rate where net present value equals zero and apply the IRR rule using Excel functions IRR, XIRR, and MIRR.

Explore how the payback period shows time to recover the investment, illustrated by breakeven in 2.14 years, noting its simplicity and neglect of discounting, risk, and post-payback cash flows.

Explore the discounted payback period, which discounts cash flows to account for the time value of money, and compare it with NPV and IRR for liquidity decisions.

Learn how the average accounting rate of return (AAR) uses average net income over average book value with straight-line depreciation and taxes, and how it compares with NPV and IRR.

Understand the profitability index (PI) as the present value of cash flows divided by the initial investment, and learn how PI greater than 1 guides decisions alongside NPV and IRR.

Explore how NPV declines as the discount rate rises, using the NPV profile to illustrate profitability and IRR at 18.91%, guiding acceptance when rate remains below that level.

Compare net present value and internal rate of return to decide between mutually exclusive projects, prioritizing NPV over IRR and using NPV profiles to resolve conflicts.

Explore how unconventional cash flows create multiple or no IRRs, compare IRR with NPV, and rely on the NPV rule for project evaluation.

Learn how net present value analysis links profitable investments to higher share prices by valuing a company as the sum of present values of existing and future projects.

apply the weighted average cost of capital to evaluate an ERP investment by calculating after-tax debt costs, MCC components, and NPV to decide.

Learn how interest deductibility creates a tax shield that lowers earnings before taxes. The after-tax cost of debt is the pre-tax rate times (1 minus the tax rate), reducing WACC.

Determine a target capital structure by using current market-value weights or averages from comparable firms to estimate WACC.

Understand how the marginal cost of capital rises with financing, forming the MCC schedule. Rank opportunities with IOS and accept projects with IRR above cost of capital to maximize NPV.

Adjust the firm's WACC to reflect project risk using the pure-play method, then apply the risk-adjusted NPV to decide on capital budgeting decisions.

Calculate the cost of preferred stock as dividend per share divided by price per share; for example, $4 dividend on $50 yields 8%, and dividends are not tax deductible.

Explore the cost of equity using CAPM, detailing how the risk-free rate, beta, and market risk premium determine the expected return used in the weighted average cost of capital.

Learn to estimate CAPM inputs by selecting a horizon-aligned risk-free rate and a market risk premium method—historical, dividend-discount (Gordon growth), or survey—illustrated with Apple and US treasury data.

Learn how to estimate the cost of equity using the dividend discount model and Gordon Growth Model, linking dividend growth, retention, and return on equity to sustainable growth.

Estimate the cost of equity using the bond yield plus risk premium approach, adding a risk premium to debt yield, and compare with CAPM and the dividend discount model.

Calculate and interpret a stock's beta, the market sensitivity, using covariance over market variance; understand how business, operating, and financial risks shape beta.

Apply the pure-play method to estimate a project's discount rate when risk differs, by selecting a comparable company and deriving unlevered and relevered betas for a CAPM-based cost of equity.

Build a complete 10-year capital budgeting model from scratch to assess Home Depot's expansion into France, evaluating best- and worst-case scenarios and whether the project will generate or destroy value.

Organize inputs in the drivers sheet to build a flexible capital budgeting model with multiple scenarios, selecting currency, risk-free rate, beta, market risk premium, and cost of capital.

Forecast sales volumes across base, best, and worst cases over ten years, apply yearly growth rates to derive revenue streams, and model scenarios with the choose function for EBITA planning.

Builds a fixed asset roll-forward schedule for PP&E, capex, and depreciation and amortization, showing initial investment timing, year-by-year allocations, and scenario planning with the choose function.

Project the cash impact of working capital by tracking DSO, DIO, DPO, and cash conversion cycle, starting with 15 million euros in year one, and delta working capital by year.

Model debt repayments and interest expenses in a corporate finance setting, using a 10-year amortization, yearly repayments, and a 3% fixed rate. Assess equity needs from net cash flows.

Build a P&L sheet from the sales forecast, derive EBITDA after expenses, compute EBIT by subtracting depreciation and amortization, determine EBT after interest, and apply taxes to reveal net income.

Learn to build project cash flows from revenues through ebitda, taxes, delta working capital, and capex; apply debt and equity financing, residual value, and net present value with wacc.

Learn to compute the weighted average cost of capital by blending debt and equity, applying tax shields, CAPM-based equity cost, and levered/unlevered beta adjustments for project risk.

Learn to calculate a stock beta in Excel by computing the covariance with the market and dividing by market variance, using Home Depot and the S&P 500.

Discount project cash flows, including terminal value, to determine present value using WACC for firm cash flows and cost of equity for equity cash flows; apply NPV, IRR, sensitivity analysis.

Evaluate a project by calculating NPV and IRR to determine value creation and investment viability, and use a sensitivity table to show how residual value drives outcomes for decision-making.

Learn how leverage uses fixed and variable costs within a cost structure to magnify earnings volatility, with operating and financial leverage shaping risk as revenue changes.

Explore how financial leverage magnifies net income and ROE: compare 100% equity with debt-financed scenarios, show tax effects, and illustrate risk of default under downturns.

Compute the operating breakeven quantity by dividing fixed operating costs by the contribution margin (price minus variable cost), and compare it to the breakeven quantity of sales.

Identify eight stakeholder groups and their diverse interests, from shareholders and senior managers to creditors, suppliers, customers, and regulators, and compare one-tier and two-tier board structures.

Explore principal-agent conflicts and governance challenges between managers, shareholders, and boards. Analyze risk tolerance, dual-class voting structures, and interests of creditors, customers, and government; explore how stakeholder management mitigates conflicts.

Identify the interests of all stakeholder parties and guide relationships through legal, contractual, organizational, and government infrastructures to improve corporate governance via ongoing engagement.

Explore how annual general meetings, the board of directors, and audit functions shape governance through voting, proxies, and internal and external audits.

Explain the board's composition and structure, including one-tier and two-tier boards, dual chair and ceo arrangements, independent directors, and the lead independent director.

The board establishes six key committees: audit, governance, nomination, compensation, risk, and investment, to oversee financial reporting, ethics and compliance, board recruitment, executive remuneration, risk tolerance, and investment strategy.

Explore how market factors—shareholder engagement, activism, proxy fights, hostile takeovers, and staggered boards and poison pills—shape corporate governance, alongside non-market forces like legal environments and media influence.

Explore how strong corporate governance drives operational efficiency, better decision making, and lower debt costs, while poor governance risks misrepresentation, scandals, and potential bankruptcy.

Examine voting structures, the board's independence and tenure, and management compensation to assess governance and long-term value, while considering shareholder rights, cross-shareholdings, and activist investors.

Explore environmental, social, and governance factors that shape investment analysis and ESG investing, including environmental stewardship, social impact, governance practices, and sustainable business models.

Learn how finance professionals use ESG factors to form investment strategies, from negative and positive screening to best-in-class and thematic approaches, including impact investing and green finance.

The corporate finance course examines fiduciary duties in ESG investing. The Labor Department guidance prioritizes better ESG practices for portfolio managers when two investments are equivalent.

Master the Texas Instruments BA II Plus calculator for corporate finance, covering setup, basic calculations, time value of money, cash flows, depreciation, and breakeven analysis.

Set up the financial calculator, adjust decimal places to four, and configure end-of-period payments and P/Y to one. Compare CHN and AOS methods, preferring CHN for this course.

Master the Texas Instruments BA II Plus for basic calculations, time value of money, powers and roots, and memory functions essential for CFA exam work.

Learn the time value of money with the tvm worksheet, solving for PV or FV by entering N, I/Y, PMT, and choosing END or BGN modes.

Explore how to analyze capital budgeting projects using cash flow worksheets and the tvm calculator to compute net present value and internal rate of return for unequal cash flows.

Use the Texas Instruments BA II Plus calculator to compute mean, variance, and standard deviation for one-variable data, and extend to two-variable data with regression, covariance, and correlation.

Apply the BA II Plus to depreciation and breakeven worksheets, using straight-line and double-declining-balance methods to compute depreciation, net book value, and breakeven quantities and profits.