Ateneo de Zamboanga University School of Management and Accountancy Accountancy Department

Course Outline

Fin 212: Financial Management Part II

Course Description: This course covers the study of the basic forms of business organizations and how these organizations function in relation to economics and accounting. Considerations include current and emerging issues, instruments and techniques affecting the practice of financial management, which include the study of financial institutions, risk and return on capital assets, bonds and stocks, capital budgeting and special topics such as hybrids and derivatives, mergers and LBOs, business failures, and international financial management. In this course, the role of financial managers, given the economic and political scenarios in Philippine Finance, will be adequately discussed and analyzed. Course Objectives: 1. To have a clear understanding of the role of financial managers in the various business organizations and financial markets. 2. To acquire adequate knowledge of important financial concepts that affects the day-to-day business in the Philippines. 3. To make use of the basic financial concepts to better understand the current issues on securities, stocks and other investments in the Philippines. 4. To allow students better understanding of short-term and long-term financial decisions and insights into specialized subjects like mergers, business failures and business reorganization and liquidation. Course Content: 1. Review on Important Basic Financial Concepts and Short-term Investment and Financial Decisions

2. Concept of Risk and Return

a. b. c. d. a. b. c. d. e. f. a. b. c. d. e. Fundamentals of Risk and Return Risk of a Single Asset Risk of a Portfolio Capital Asset Pricing Model Differences Between Debt and Equity Valuation Fundamentals Corporate Bonds Bond Valuation Ordinary and Preference Shares Ordinary Share Valuation The Capital Budgeting Decision Process Relevant Cash Flows Finding the Initial Investment Finding the Operating Cash Inflows Finding the Terminal Cash Flow

3. Bond and Stock Valuation

4. Capital Budgeting: Overview and Cash Flows

5. Capital Budgeting: Techniques

a. Overview b. Non-Discounted Cash Flow Methods i. Payback Period ii. Payback Reciprocal iii. Bailout Period iv. Accounting Rate of Return (ARR) c. Discounted Cash Flow Methods i. Net Present Value (NPV) ii. Profitability Index (PI) iii. Discounted Payback Period (DPP) iv. Internal Rate of Return (IRR)

6. Capital Budgeting: Risk and Refinement

a. Risk in Capital Budgeting and Dealing with Risks b. Capital Budgeting Refinement

7. Long-term Financial Decisions: The Cost of Capital

a. b. c. d. e. Overview Cost of Long-term Debt Cost of Preferred Stock Cost of (New) Common Stock Weighted Average Cost of Capital (WACC)

8. Long-term Financial Decisions: Leverage and Capital Structure

a. Leverage b. Capital Structure i. Overview ii. EBIT-EPS Approach iii. Choosing the Optimal Structure

9. Long-term Financial Decisions: Dividend (Payout) Policy

a. b. c. d. e. f. a. b. c. d. e. a. b. c. d. a. b. c. d. e. f. Overview and Basics of Dividend Policy Types of Dividends in the Philippines Dividend Policy Theories Mechanics of Payout Policy Factors Affecting Payout Policy Types of Dividend Policies Overview Lease Convertible Securities Stock Purchase Warrants Options Mergers, LBOs and Divestitures Fundamentals Analyzing and Negotiating Mergers Business Failure Fundamentals Reorganization and Liquidation in Bankruptcy The Multinational Companies and its Environment Financial Statement Risk Short-term Financial Decisions Long-term Investment and Financing Decisions Mergers and Joint Ventures

10. Hybrid and Derivative Securities

11. Mergers, LBOs, Divestitures and Business Failures

12. International Managerial Finance

Grading System: Midterm Grade Final Grade = (1st Quarter Class Standing X 2/3) + (Midterm Examination X 1/3) = (Midterm Grade X 1/3) + (2nd Quarter Class Standing X 1/3) + (Final Examination X 1/3) 50% 30% 10% 10% 100%

Composition of Class Standing (1st and 2nd Quarter): Long Exam Short Quizzes Seatwork, Assignment, Boardwork, Case Analyses, Projects Graded Recitation, Class Participation, Projects, Others Total Class Standing References:

Gitman, Lawrence J. and Zutter, Chad J., Principles of Managerial Finance, 13th Edition, Copyright 2012 by Pearson Education Brigham, Eugene F. and Houston, Joel F., Fundamentals of Financial Management, 10th Edition, Copyright 2004 by Southwestern/Mason, Ohio, U.S.A. Prepared by: John Carlos S. Wee Fin 212 Instructor, 2nd Semester 2012-2013