1、Principles of Corporate FinanceFall 2021WhaT DID You Do During YOUR Summer VacATIONYour FutureYour FutureDuring this year you will:Complete a very heavy course load especially this semesterPrepare for and pass multiple certificationsCET 6,TOEFL, IELTS, GRE, GMAT, etc Decide on the direction of your

2、career following your graduation in 2021This Is the Mid-Point of Your College LifeYour FutureWhat is the next chapter in your life?Careers in FinanceCommercial BankingInvestment BankingInvestment Management (Funds)Insurance CompaniesForeign CorporationsReal Estate CompaniesSmall Businesses/Your Own

3、BusinessGovernment JobsYour FutureBut most of you (75-80%) will find a job working in a Bank, most likely in your hometownBankingYour FutureWhat are the different type of jobs in a bank?The most common jobs are:Retail BankingRelationship ManagerFinance Careers in BankingCommercial BankingCash Manage

4、mentCredit CardsBridge FinancingAdvisory Services (Consulting) Risk ManagementCorporate FinancingForeign ExchangeForeign CompaniesFinance Careers in CorporationsCFO (Chief Financial Officer)Treasury (Cash Management)Corporate Finance (Capital Markets)Risk Management (Insurance)Controller (Accounting

5、)Finance Careers in CorporationsCFO (Chief Financial Officer)Investor RelationsPlanning & Analysis (Strategic Planning, Budgeting, Capital Expenditures, Reporting, etc)Credit & CollectionsBenefits InvestmentsInternal AuditForeign CompaniesForeign CompaniesYour FutureWhy did you select Finance as you

6、r college major?How has your college education prepared you for your career?Why would I want to hire you?What are your competitive advantages?What are your skills?Your FutureWhat are your dreams?What gets you excited?What type of job so you think will will make you fill satisfied and fulfilled in li

7、fe?What is your strategy to accomplish these goals?Your FutureWhere you want to be in 10 Years? 20 Years?Think “Outside the Box - Dare To Dream Bigger IdeasDo not accept mediocrity!Your Future PlansYour FutureWill you?Begin thinking about finding a job; What kind of job is it and where do you see yo

8、urself?What are your experiences, your interests, your advantages?What do you need to do to prepare yourself for this?Your FutureFinding a Good Job is HARD Work!Job Seeking SkillsResume Writing SkillsInterview SkillsYour FutureYour FutureWill you?Further your studies - either in China or abroad; the

9、n you will need to prepare for: Post Graduate Examination GRE/TOEFL/GMATYour FuturePost Graduate Degrees (In China)Master of FinanceMaster of Financial EngineeringMaster of EconomicsPhD - Finance or EconomicsStudy in ChinaPost Graduate Degrees (Abroad)Master of FinanceMaster of Financial Engineering

10、Master of EconomicsPhD - Finance or EconomicsStudy AbroadStudy AbroadWhat is the Competition?Masters of Business Administration (MBA) vs Master of Finance or Master of Financial EngineeringWhat is the Cost-Benefit?Study AbroadProgramMBAMF/MFEExperienceRequiredNoLength2 Years12-18 MonthsInternshipsYe

11、sLimitedProgram TypeGeneral/MgmtTechnical/ SpecificVisa IssuesNoneYESYOUR JourneyYour FutureThis semester may be the most important and most challenging time of your college life!You will feel like you are climbing the highest mountainIt is going to be very difficult and you will want to quit at tim

12、esBut can you push onward; keep climbing and reach to the topYour FutureFor the next two semesters, we will be togetherFall Semester PCF or Principles of Corporate FinanceSpring Semester Case Study In FinanceYour FutureThese courses are difficult and will test your abilities and your characterYou wi

13、ll think you can not continueYou will want to quit and give upBy the end of May 2021, you will have climbed this mountain and we will have done it togetherIntroductionClass IntroductionInstructor: Mr. David LambertE-Mail: Office Hours: by appointmentMeeting Time & PlaceFinance 1 & Finance 2:Financia

14、l Engineering & Insurance:Class ObjectivesTo study the basic theories and concepts of Corporate Finance with emphasis on practical applications and exercisesTo develop an interactive classroom style with strong student participation & discussionClass ObjectivesTo practice English language skills inc

15、luding reading, listening, writing, and speakingTo acquire advanced analytical skills with heavy emphasis on spreadsheets and internet sourcesClassroom RulesHonesty is the most important lesson that I want you to learn in this class: Cheating and other unethical conduct in this class is not acceptab

16、le at any timeTurn off your mobile phone; I do not want to be interrupted during classDo not study for other classes or prepare other materials during classClassroom RulesAttendance at every class session is mandatory and will count in calculating your score for the class. I expect that students to

17、be on time for class and not be late. All assignments are to be completed on time at the assigned due date and will be penalized if submitted late Other InformationEach lessons PPT will be available for you to copy after class.Selective answers to the sample problems will also be available after cla

18、ss.Grading & Student EvaluationQuizzes, Worksheets, Attendance15%Business Summaries15%Mid Term Examination30%Final Examination40% Total Score:100%This is preliminary and may change Quizzes, Worksheets“POP Quiz: an unannounced quiz given at any time during the semester to evaluate the students unders

19、tanding of the course materialWorksheets: exercises to allow you to practically apply the topics in the course to gain further experienceAttendance/Seating ChartI use a seating chart to:Check class attendanceLearn your namesAttendance/Seating ChartNext week, select your seat for the next 8 weeks and

20、 complete the seating chart with your student numberYou will be able to switch your seats mid-way through the semester to allow you to change your locationBusiness SummariesA written essay in English of a recent business article or business topic to be submitted every 4 weeks consisting of between 1

21、50250 wordsI am interested in your ideas and opinions on the topic. Do not just copy from the Internet . . . . I can do that myself ExaminationsIn this course there is both: Mid Term & Final ExaminationsMultiple Choice; Matching; Fill-in-the Blank; Short AnswerProblems simple & multi-step (requires

22、complex thinking & multiple skills)TextbookThere is no textbook required for this classMy PPT draws from 3-4 well-regarded books on Corporate Finance summarizing what I consider the key points as well as other material I consider importantIf you require additional background material or more detaile

23、d information on a topic, then use the following:TextbookFundamentals of Corporate Finance; Stephen A Ross; Randolph W Westerfield; Jeffery Jaffe; McGraw-Hill Higher Education; 7th Edition Corporate Finance, Theory and Practice; Aswath Damodaran; John Wiley & Sons; 2nd Edition Principles of Corporat

24、e Finance; Richard A Brealy & Stewart C Myers; McGraw-Hill Higher Education; 7th Edition Keys to Success in This ClassSit in the Front of the ClassroomClass Attendance: there is a direct relationship on your class attendance and your performanceReview Frequently: this class focuses on application, p

25、roblem solving & general knowledge; you can not learn the material by cramming 1 or 2 days before the exam Keys to Success in This ClassPractice, Practice, Practice: complete sample problems outside of class to test your understanding of the materialsBe a Problem-Solver - Use Critical Thinking Skill

26、s: to practically apply what you learn, I want you to develop the ability to “think outside the box Class TopicsIntroductionFinancial AnalysisForecasting & PlanningFoundationsDebt & EquityInvestment Analysis Class TopicsIntroductionBusiness FoundationsBusiness OrganizationsWhats Next: 4 Years After

27、the Financial Crisis Is Uncertainty and Volatility the New Norm?Will the Global Economy Ever Recover Class TopicsFinancial AnalysisFinancial StatementsFinancial AnalysisOperational AnalysisPractical Exercise: Dell Computer 10K & Financial Analysis Class TopicsForecasting & Planning; Financial Foreca

28、stingFinancial PlanningPractical Exercise: The Body Shop International Class TopicsFoundationsTime Value of MoneyInterest RatesBusiness EthicsPractical Exercise: To Be Determined Class TopicsDebt & EquityDebt FinancingCost of DebtEquity FinancingCost of EquityWeighted Average Cost of Capital (WACC)P

29、ractical Exercise: To Be Determined Class TopicsInvestment AnalysisBackgroundEconomic Value Added (EVA)Capital BudgetingMergers & AcquisitionsDividend PoliciesPractical Exercise: To Be DeterminedSemester GoalsBe able to review and complete a thorough and detailed analysis of the Financial Statements

30、 of any companyFinancial Health & PerformanceStrengths & WeaknessesHow Does It Makes a ProfitCompetitive AdvantagesIndustry Position & AnalysisSemester GoalsBe able to prepare Pro-Forma Financial Statements (Forecast)Use Sensitivity Analysis to Test the Reasonableness of your Forecast Understand the

31、 Key Drivers of the Company & Key Performance Indicators (KPI)Semester GoalsBe able to know the various types of Debt & Equity Financing used in Corporate Finance; Calculate the Cost for Each Type Calculate WACC (Weighted Average Cost of Capital)Semester GoalsBe able to Calculate the EVA (Economic V

32、alue Added) of a CompanyBe Able to Prepare a Proposal and Recommendation for a Capital Investment ProjectAnalyze Using Various Generally Accepted TechniquesDetermine Whether The Investment Will Create Value or Destroy ValueSemester GoalsHave Some Fun I Want You to Learn Some Really Useful and Practi

33、cal Skills That You Can Use In Your Future CareerI Want You to Realize that Finance is Not Just Theory and Abstract Concepts, but Finance Is Dynamic, Concrete, and Extremely Interesting, and Finance Plays an Extremely Critical RoleClass ObjectivesBusiness is the Exchange of Goods and ServicesClass O

34、bjectivesExchangeClass ObjectivesAre You Ready To Accept This Challenge?Your IntroductionOn a piece of Paper: (Big & Bold)Student NumberChinese NamePinyin Name (indicate tones)English Name(On back)Mobile Telephone NumberEmail and QQ NumberHometown & ProvincePlagiarismPlagiarismDictionary defines pla

35、giarism as:Plagiarism - n 1: a piece of writing that has been copied from someone else and is presented as being your own work 2: the act of plagiarizing; taking someones words or ideas as if they were your ownPlagiarismWebsters Dictionary defines plagiarism as: to plagiarize (Pronunciation: plA-j&-

36、rIz)to steal and pass off (the ideas or words of another) as ones own to use (anothers production) without crediting the sourceto commit literary theft : present as new and original an idea or product derived from an existing sourcePlagiarismAs a student in one of the top programs in China for Finan

37、ce, intellectually honesty and integrity is expected on all your work.I have a zero tolerance policy regarding plagiarism there is no exceptions PlagiarismWhen you prepare any work for this class, you must make sure that it is your own original work It is not directly copied from other sources such

38、as the Internet or from books and articles You need to properly cite and give credit to the sourcePlagiarismIf I find that you have prepared material that is not your own original work, then the penalty will be that you will receive a “0 for that assignment and that you may even fail the courseCode

39、of EthicsCode of EthicsAlmost every company has created a Code of Ethics that it expects its employees to follow as a representative of the companyFor Senior Managers and Financial Managers, there is an even higher expectation for ethical and honest business conduct than for other employeesCode of E

40、thicsFinancial Managers are responsible for preparing accurate and reliable financial information to investors and for properly classifying the companys financial transactionsIt is the duty of every Financial Manager to exhibit behavior and conduct beyond reproach and suspicionAs a future Financial

41、Manager, you are responsible for following the Code of Ethics for this classClass Code of EthicsAs a student in the Finance Department of Xiamen University and a future business leader and financial manager, I bear a special responsibility for promoting honesty and integrity in all of my work, pract

42、ices, and behavior. During the Fall 2021 Semester, I agree to abide by the following:Class Code of EthicsI will engage in and promote honest and ethical conduct, including all homework, assignments, quizzes, and examinations.I will comply with the classroom rules established by the instructor of the

43、 class. Class Code of EthicsI will not engage in cheating of any type at any time on any work that I shall produce or prepare for class. My work shall be entirely my own. I shall not copy or allow my work to be copied by others and I will not provide the questions to any quiz or examination to anoth

44、er student. Class Code of EthicsI acknowledge that I understand the meaning of plagiarism and will not copy from the Internet or any other source words or ideas that I will claim as my ownI will attempt to follow not only the letter of this code, but also the spirit of this codeClass Code of EthicsV

45、iolations of this Code of Ethics will not be tolerated in any form and the consequences will result in disciplinary action up to and including:receiving a failing grade for the courseexpulsion from the class. Class Code of EthicsI agree to the terms and conditions in this Code of Ethics.Class Code o

46、f EthicsEach student in Principles of Corporate Finance must:Read, sign, and turn in to the instructor a signed copy the Class Code of EthicsAgree to follow the principles in the Class Code of Ethics throughout the semsesterBe subject to any disciplinary measures if any of the principles are violate

47、dBusiness foundationsBusiness FoundationsEconomy Exchange of goods & services (including labor) between agreeing parties Allocation of scarce resources Efficiency in how these resources are utilized Equity or fairness in the use of these resourcesBusiness FoundationsA market economy is an economy ba

48、sed on the division of labor in which the prices of goods and services are determined in a free price system set by supply and demand.Source: WikipediaBusiness FoundationsLess regulation; Government involvementMore regulation; Government involvementWhat are different ways that the government is invo

49、lved in an economy?What are some reasons for this involvement?Business FoundationsCentered on different types of business organizations & activities with the belief that more specialization and community will create greater wealth & increased value than can be created solely by the individual.Surplu

50、s (wealth) is converted into capital which then is invested to produce more future economic benefits. Business FoundationsWhat are some types of Capital?Business FoundationsSocial CapitalIndividual CapitalIntellectual CapitalFinancial CapitalFinancial CapitalFinancial CapitalInvestmentReturnInvestments - Assets=Business FoundationsWhat do you think is the main purpose of a business organization?Business FoundationsBusiness FoundationsBusiness FoundationsShareholder: a person, group, organization or system that holds equity in a bus