Corporate Finance

OBJECTIVES

By the end of the Corporate Finance training Course, participants will be able to:

• Understand the need for corporate finance in the present era
• Calculate trade-off between risk and return profitability and liquidity
• Recognize various alternatives present to raise finance and choose what’s best for their organization
• Identify various investment avenues available for the commitment of funds and how to evaluate them using different techniques
• Perceive various financial objectives and differentiate between profit maximization and wealth maximization
• Understand capital structure theory and its practical applicability
• Comprehend dividend relevance and issues in dividend policy
• Know the principles of working capital management

Course Outline

Introduction to corporate finance

• Understanding corporate finance and finance functions
• Profit maximization vs. wealth maximization
• Concept of time value and return
• Capital market theory
• Portfolio theory: Capital asset pricing model
• Agency problem

Capital Budgeting

• Need for investment decisions
• Investment evaluation criteria
• Non-discounted cash flow methods and techniques: Accounting rate of return, Payback period,
• Discounted cash flow methods and techniques: Internal Rate of Return (IRR), Net Present Value (NPV), Profitability index
• Estimating cost of capital: cost of debt, cost of preference capital, cost of equity capital

Capital structure and financing decision

• Relevance of capital structure: Net income approach
• Net operating income approach
• MM hypothesis
• Pecking Order theory
• EBIT-EPS analysis
• Financial and operating leverage

 Long- term financing

• Capital market
• Shares: equity shares, rights issues, preference shares
• Debentures
• Asset-based financing
• Venture capital

Dividend decision and policy

• Dividend relevance: Walter’s model and Gordon’s model
• Issues in dividend policy
• Lintner’s model of corporate dividend
• Forms of dividend
• Deciding retention ratio and pay-out ratio

Working capital management

• Operating cycle and cash conversion cycle
• Fixed and fluctuating working capital
• Determinants of working capital
• Liquidity vs. profitability
• Estimating working capital needs
• Matching approach, conservative approach and aggressive approach

Corporate restructuring

• Introduction to corporate restructuring
• Mergers and acquisitions
• P/E and EPS analysis in mergers and acquisitions
• DCF approach
• Leveraged Buy-outs

 International Financial Management

• Foreign exchange market
• Foreign exchange risks and hedging
• Exchange rate quotations and arbitrage
• Forwards, swaps and interest parity