Course Description
Focuses on valuing entire business enterprises. Topics include tying the financial statements together, forecasting free cash flows, estimating value via discounted cash flow, public multiples and comparable transactions, estimating the cost of capital, and valuation of companies in various transactions and restructurings.
Athena Title
VALUATION
Equivalent Courses
Not open to students with credit in FINA 8110
Prerequisite
FINA 7010
Semester Course Offered
Offered every year.
Grading System
A - F (Traditional)
Course Objectives
This course is intended to provide students with a foundation in the modern theory of corporate finance. We will focus on developing a framework that is useful for understanding a broad range of major corporate financial decisions. The topics include the goals and conflicts among different stakeholders in the firm, governance, determinants of optimal investment and payout policy, tradeoffs in the choice of an optimal capital structure, information and bargaining problems associated with financing new investments, as well as changes in control. A more detailed description includes descriptions of types of debt and equity, the role of capital structure in competitive strategy; the design of capital structure and securities to control information problems and limit conflicts of interest between different classes of security holders; procedures and costs of issuing securities including initial public offerings, and the determinants of optimal payout policy, as well as mergers, divestitures, asset sales, going private, and bankruptcy, among other change in control strategies.
Topical Outline
•Financial Modeling Corporate Valuation DCF, multiples Apply valuation model to various settings: valuation as an equity analyst, fairness opinion, various transactions Describe the fundamentals of options valuation (in simple NPV framework, no option valuation models such as Black-Scholes, which will be covered in derivatives) Earnings Quality and financial statement analysis intro/review Executive Compensation •Risk management, hedging International Capital Budgeting/COC Exposure Measurement/Management Student presentations: Analyst report
Syllabus