Welcome to the Finance and Risk Management site of Bill Foote. This week I am beginning a new Corporate Finance Topics course at Manhattan College (www.manhattan.edu). Here is a course syllabus:

Corporate Finance Topics

Graduate MBA Program ♦ MBAL 645

Course Description

Decisions made in complex public and private sector organizations heavily rely on financial risk and performance data, models, process, and supporting technological and human agent capabilities. This course will develop analytics that support key financial decisions. Covered are the linkages among performance, business process, decisions, and functions; financial analytical tools; applications of financial analysis to existing and impending problems that face decision makers across the value chain using a sample of cases. Since finance plays an enterprise role across every function, students will gain a working knowledge of the way in which their role, whether in finance or not, will participate in the financial decision making process.

Course Objectives

·     Understand prevailing and leading financial practices and their application in financial decision support

·     Prepare students to participate in the financial decision making process using accounting, operations research, organizational design, and information management skills and knowledge

·     Prepare students to manage a function, with finance as the working example, using capability maturity models, process improvement, and roadmap development

Course Delivery Approach

1.      Use existing financial concepts, theory, and a maturity model of practices to inform the design of financial decisions and the structure of implementing decisions in value chains and organizations

2.      Select key decisions and develop models of those decisions using accounting, operations, strategy, and organizational constructs

3.      Use illustrative cases with exemplar deliverables to develop practical financial decision models based on sound theory and practice in the context of existing and evolving financial institutions, regulations, guidance

4.      Challenge students to develop their own cases of corporate financial decision making based on illustrative cases or their own experience

5.      Organize class work in groups and individually that builds on templates and exemplars

6.      Evaluate student work using written and presented assignments during the term of study and one paper written at the end of the term

Course Materials

·     Reference: Brealey and Myers, Principles of Corporate Finance, any edition for models, latest edition for institutional details (parts of which may be accessed in open sources)

·     Template spreadsheets and databases

·     Powerpoint handouts for each topic

Course Deliverables

1.  Financial decision taxonomies and information model

2.  Financial decision models for selected financial decisions

3.  Financial function capability maturity assessment, process improvement, business case, and improvement program roadmap

4.  Financial Decision Dashboard

Suggest Requisite Skills	New Skills Developed in the Course
Present value, probability distributions and measures, linear regression	Application of present value, decision trees, probability to model financial decisions
Microsoft Office or OpenOffice spreadsheet, database, presentation proficiency	Use of Solver, elementary macros and VBA, and functionality to build a basic interactive dashboard
Basic accounting model components: chart of accounts, income statement, balance sheet, cash flow statement, journal entries	Linked taxonomies and the design of financial decision metrics

TOPICS

Managing Credit Risk Organizations post collateral as part of any number of contractual relationships. For example, most states require that companies post collateral to pay for potential workers compensation claims Other examples include collateral for exchange trading, project performance and surety bonds, counterparty credit arrangements, and warranty claims. A typical instrument for buying credit protection is the credit default swap. This topic develops an Excel pricing model of a CDS using Excel VBA. Reviewed are several finance areas including present value and risk neutral valuation.

Operational Risk Management: Self-Insure or Insure? Organizations manage their market, credit, operational, strategic, and regulatory risks using various risk elimination and transfer techniques. This topic uses a decision around whether or not to self-insure (captive insurance included) or buy a policy to manage the risk of a new product launch. The topic introduces risk management process according to COSO II, and other guidance, to develop quantitative and qualitative models of impact and vulnerability. These models are then applied to the cost-benefit problem of whether and how much to pay for insurance.

Working Capital Management: Borrow or not? Initial short-term financial plans are typically based on initial required liquidity. When short-term sources of cash are constrained (receivables, inventory, and asset deferrals versus borrowing, payables, and expense deferrals), more liquidity is required, the liquidity premium rises, and the implied and realized interest expense increases. This topic builds a model that explores this tradeoff for a producer that trades the inputs and outputs of the production process. Optimal working capital requirements are developed against structural, tactical, and contingent liquidity arrangements.

Copyright 2015, William G. Foote