Contents of the subject

1. Basics in Finance
Basic Principles in Finance, Basic financial decisions, Financial objectives, Capital structure and Leverage-Effect
2. Basics of investments and investment rules
The term investment, Dynamic investment rules (net-present-value method, annuity method, internal-rate-of-return method, complete financial plan), Basic valuation of bonds, stocks and companies.
3. Financial analysis and financial planning
Financial statement analysis, Cash Flow calculation, Flow of funds statement, financial planning
4. External Financing
Equity financing, Debt financing (long- and short term), Mezzanine financing
5. Internal Financing
Internal Financing, Management of assets and liablities
6. Lecturer individual components (e.g. portfolio theory or e.g. options)

Qualification aims of the subject

The course provides an overview of the basic problems and solution concepts of corporate financial management from an application oriented perspective and on a sound theoretical basis. Students become familiar with important investment decision criteria (present value concept, internal rate of return, payback period) and learn how to apply and critically assess them. They also will learn to use basic techniques of security and company valuation. They get acquainted to the most important forms of financing (equity, debt, mezzanine) and understand the role of capital structure and financial leverage. They will also become familiar with well-known financial ratios for company assessment.

After successful completion of the module, students will have acquired the following competencies:

ILO 1: They are able to recall and describe important problems, concepts and methods of finance and their context in business administration.

ILO 2: They are able to explain fundamental financial concepts like the Leverage-Effect, Present Values, Cash Flow, Financial ratios, etc., apply them to given problems and interpret the results.

ILO 3: In particular, they are able to confidently use the present value concept for investment decisions and basic valuation problems.

ILO 4: They can critically analyze theoretical methods and concepts with respect to their applicability in practice and transfer the solving methods to new problems.

Applicability of the subject

Advanced courses in business administration and economics, especially all courses of the finance specialization.

The module is available for students of the following programs: Business Administration, Economics, IBAEX, Wirtschaftsrecht, Gründung und Nachfolge, Deutsch-Französischer Studiengang.

The nature of the examination / requirements for the award of credit points

The assessment is an exam (120 minutes). This exam consists of several problems, which test different areas of knowledge and competencies.

- Knowledge questions require students to describe definitions, concepts or facts. Thus, knowledge about and correct understanding of these is examined. (ILO 1)

- Problems containing calculations test the understanding of the given problem statement and the ability to solve it with an adequate method. (ILO 2, ILO 3)

- Other problems require students to interpret, summarize or compare facts, statements or previously found solutions. Such problems test the ability to critically analyse methods, concepts and solutions regarding their applicability in real life. (ILO 4)

Literature and learning resources

core
Berk / de Marzo: Corporate Finance. Pearson.

Brealey/Myers: Principles of Corporate Finance, McGraw-Hill

(Hillier)/Ross/Westerfield/Jaffe/Jordan: Corporate Finance, McGraw-Hill
    
additional
Damodaran: Corporate Finance: Theory & Practice, Wiley Series in Finance

Megginson/Smart/Lucey: Introduction to Corporate Finance, South Western

Teaching and learning forms

Lecture

Participation requirements

Introduction to Financial Accounting, Mathematics for Business and Economics