Other languages of instruction: Catalan, English
If the student is enrolled for the English track then classes for that subject will be taught in the same language.
Tutorials should be requested by email at email@example.com
The general purpose of Financial Statements is to provide information about the results of operations, financial position and cash flows of a Company. All this information, should also be useful for financial planning, i.e. how the company is going to afford its strategy in the future. On the other hand, Companies usually make decisions in situations of uncertainty, where they must properly analyze the risks associated with each alternative. This course provides the student with tools to analyze the financial situation of a company, determine the risks associated with different alternatives of investing as well as the proper financing for each of them.
It is recommended that students have completed the course Financial Accounting I
- To be able to analyze and interpret financial statements
- To properly understand working capital management, short term investing and financing.
- To be able to make and manage financial projections and Financial forecasting
- To be able to calculate cash flows
- To understand time Value of Money and valuation methods of discounted cash flows
- To understand long term investment and financing.
- 01 - To be familiar with, understand and apply the methods, techniques and instruments specific to accounting.
- 02 - To be familiar with and know how to interpret and apply current accounting standards.
- 03 - To select and adequately apply applicable accounting alternatives.
- 04 - To understand and know how to use financial terms within a business framework.
- 05 - To understand the functions of corporate finance departments.
- 06 - To know how to apply the main policies for capital structure and asset management.
- 31 - To develop the ability to identify and interpret numerical data.
- 32 - To acquire problem solving skills based on quantitative and qualitative information.
- 33 - To be able to search for, interpret and convey information.
- 50 - To acquire the ability to relate concepts, analyse and synthesise.
- 51 - To develop decision making skills.
- 52 - To develop interpersonal skills and the ability to work as part of a team.
- 53 - To acquire the skills necessary to learn autonomously.
- 54 - To be able to express one’s ideas and formulate arguments in a logical and coherent way, both verbally and in writing.
- 59 - To skilfully use software and ICTs.
At the end of the course the students should understand:
- The fundamental concepts of financial management
- How to value financial assets
- Investing in long-term assets: capital budgeting
- Determining capital structure and dividend policy
- Working capital management and forecasting
PART I. FUNDAMENTALS OF FINANCIAL MANAGEMENT
Topic 1. Introduction to Financial Management.
An overview of Financial Management. The goal of Financial Management.. Forms of Business organizations. Stock prices and shareholder value. The agency problem and control of the corporation.
Topic 2. Basic concepts of Financial Management.
Financial Markets and Institutions. Financial Statements. Cash Flow and Taxes.
PART II. FINANCIAL ANALYSIS AND PLANNING
Topic 3. Analysis of Financial Statements.
Ratio analysis. Liquidity ratios. Asset management ratios. Debt management ratios. Profitability ratios. Uses and Limitations of ratios.
Topic 4. Financial Planning and Forecasting
Review of accounting. Forecasted balance sheet. Forecasted Income statement. Forecasted cash flow. Using the ratios for forecasting. Cash Flow estimation
Topic 5. Operating and financial leverage
Operating leverage. Financial leverage. Degree of combined leverage.
PART III. WORKING CAPITAL MANAGEMENT
Topic 6. Current Asset management
The cash conversion cycle. Financial assets management. Current assets investment policies. Financial assets, accounts receivable and inventories
Topic 7. Short term financing
Financial liabilities Current asset financing: accounts payable, bank loans, other forms of short term financing.
PART IV. THE CAPITAL BUDGETING PROCESS
Topic 8. Time Value of Money
Time Lines. Future values. Present values. Annuities and perpetuities.
Topic 9. Risk and capital budgeting
Risk defined. Measuring stand-alone risk. Within firm and beta risk. Unequal project lives.
Topic 10. Valuation and rates of return
Key characteristics of Bonds. Bond valuation. Bond Yields. Bond Coupon. Default risk. Bond market. Stock price. Stock valuation
Topic 11. The cost of capital
Introduction to cost of capital. Cost of debt. Cost of equity. Weighted Average cost of capital.
Teaching and learning activities
Evaluation systems and criteria
Continuous evaluation (60% of the final grade):
- Midterm exam 25% (unrecoverable).
- Hand in of case studies, class attendance and participation 15% (unrecoverable).
- Group Project (20%)
Final evaluation (40% of the final note):
Bibliography and resources
BIRGHAM, E.; HOUSTON, JOEL F. Fundamentals of Financial Management. 12th Edition Cengage Learning, 2009
AMAT, O. Análisis económico-financiero. Barcelona: Gestión 2000, 2008.
ROSS, S. A.; WESTERFIELD, R. W.; JAFFE, J. F. Corporate Finance. Homewood, R.D.: Irwin, 1990.
HIGGINS, ROBERT C. Analysis for Financial Management. Mc Graw Hill International Edition, 2009
BLOCK, HIRT AND DANIELSEN. Foundations of Financial Management. Mc Graw Hill Irwin