In fact, the main educational goal of the course is to stress that the value of capital depends on the ability to generate operating cash flows in line with the risk-return expectations of all stakeholders. According to this perspective, the long-term equilibrium of the company can be achieved only if all stakeholders’ interests are satisfied, without discriminating or egoistically excluding some of them.
More specifically, the main contents of the course will focus on the computation and interpretation of the historical (cash flow statement) and future (budget) cash flows, on the valuation of stocks and bonds, on the capital budgeting decisions and on the estimation of the company cost of capital. All these topics will be presented on a theoretical and practical basis, allowing students to develop the quantitative skills necessary to cope with the main corporate financial decisions.
1. Knowledge and understanding
• Acquire knowledge of the basic models of corporate finance and, moreover, understand the key-mechanisms behind the analyses and forecast of historical and prospective cash flows and capital provision/allocation decisions
2. Applying knowledge and understanding
• Be able to analyze and evaluate the financial equilibrium of a company
• Be able to evaluate the financing and investment decisions
• Be able to identify the correct risk-return relation
• Be able to estimate the correct cost of capital for the company
3. Judgmental capabilities
• Critically evaluate the capital budgeting decisions, choosing the most proper method
• Critically evaluate the financial sustainability of the corporate investments
• Evaluate the financial soundness of the company and its ability to maintain its economic and financial equilibrium in the medium-short term horizon
4. Communication abilities
The course will allow students to enhance their communication abilities through the knowledge of the technical language in the corporate finance field.
5. Learning abilities
The course will increase the students’ ability to integrate the study of the book with practical exercises/cases, in person and online.
2. Computation of historical cash flows and analysis of the financial equilibria
3. Computation of the future cash flows: the budget
4. Capital budgeting decisions: the Net Present Value method (NPV)
5. Other criteria for the capital budgeting decisions and applications (Equivalent Annual Cost)
6. Bonds valuation
7. Stocks valuation
8. The risk-return relation: the Capital Asset Pricing Model (CAPM)
9. The risk-return relation in the capital budgeting decision
10. The capital structure decisions
a. Basic principles
b. The Modigliani-Miller theorem with corporate taxation
Lectures combine the presentation of the basic principles in corporate finance with their practical application through exercises and business cases.
The course will benefit of the presence of 1 tutor, who will make extra exercises and help students to get prepared for the exam.