BUS 4274 Syllabus

Course Description

Required Resources

Assessment

Policies

Schedule

Assignment

SEATTLE PACIFIC UNIVERSITY

School of Business, Government, and Economics

BUS 4274 (5) – Autumn 2015 (CRN 3499) Office: McKenna Hall 219
Problems in Corporate Finance Phone: 206-281-3523
McKenna Hall 113, TR 9-11 Email: reb@spu.edu
Randy Beavers, Ph.D. Office Hours: MWF 10-11, TR 1-2, and by appointment

 

About Me:

 

I received my Ph.D. in Finance from the University of Alabama in 2015. While there, I taught business finance and financial management. My research interests focus on executive compensation, corporate finance, and corporate governance. Before this, I interned as a statistical clerk at the Bureau of Justice Statistics in Washington, D.C. In my spare time, I watch football, play tennis, and travel. I worship at Calvary Ballard.

 

Mission:

 

Seattle Pacific University seeks to change the world and engage the culture by graduating students of competence and character, cultivating people of wisdom, and modeling a grace-filled community.

Deeply grounded in Christian faith and values, we develop leaders who advance human flourishing through service in business, government, and civil society.
Course Description:

 

Prerequisite: BUS 3250. Gives an in-depth treatment of the more critical aspects of financial decision making introduced in BUS 3250, utilizing lectures and case studies. Topics typically include mergers and acquisitions, forecasting and cash budgeting, valuation techniques, and capital structure issues. This course encourages critical thinking about finance through teamwork, oral and written communication, and ethically sensitive discussions. These experiences will help you succeed in the finance job market.

 

Learning Outcomes: By the end of the course students should be able to:

  1. Make investment decisions using net present value (NPV).
  2. Compare and contrast how debt and equity play a role in a company’s financing and valuation.
  3. Compute financial ratios to determine company prospects.
  4. Prepare a cash budget.
  5. Recognize financing processes, such as agency, compensation, and mergers.
  6. Professionally analyze a company through documentation and presentation.

Required Resources:

 

Brealey, R., S. Myers, and F. Allen (2014). Principles of Corporate Finance. Mc Graw Hill.

 

 

Participation in Community

Class sessions will include lecture, discussion, problem-solving by hand and in Excel, and quizzes throughout the quarter. The material requires engagement in multiple facets to enhance learning. Check Blackboard for additional materials (not for a grade) to enhance your success.

Eat before class, but you may bring drinks.

 

Plan on spending 2 additional hours associated with class preparation / studying for each undergraduate credit. Because this is a 5 credit course, you should expect to devote, on average, an additional 10 hours of studying each week to be successful.

 

Electronic devices are permitted and encouraged. However, using these tools for other activities unnecessary for the class is strictly prohibited.

 

Come by office hours, or schedule an appointment via e-mail if you have questions or concerns. For time-sensitive questions, e-mail me only after demonstrating an attempt.

Grading

96-100 A 77-79 C+ 60-63 D-
90-95 A- 74-76 C 59 & ↓ E
87-89 B+ 70-73 C-
84-86 B 67-69 D+
80-83 B- 64-66 D

Student Learning Assessment

 

  • 6 Quizzes 60%

Each quiz will include short answer and/or problem-solving questions. Some quizzes will contain an out-of-class assignment with Excel. Lecture will cover the Excel skills necessary to succeed on the quiz.

  • (Individual) Company Paper 20%

See the company analysis portion at the end of the syllabus. The paper is due the morning of the presentation. You will use BlackBoard Turn It In.

  • (Group) Industry Presentation 20%

See the presentation evaluation form at the end of the syllabus. PowerPoint presentations should be submitted via Blackboard by the morning of the presentation.

 

 

 

 

 

 

 

 

 

 

Learning Outcomes and Assessment

Learning Outcome Q1 Q2 Q3 Q4 Q5 Q6 Paper Presentation
Make investment decisions using net present value (NPV). X X X X X X  
Compare and contrast how debt and equity play a role in a company’s financing and valuation.

 

X X X X X X
Compute financial ratios to determine company prospects.

 

X X X X
Prepare a cash budget. X
Recognize financing processes, such as agency, compensation, and mergers.

 

X X X X X  
Professionally analyze a company through documentation and presentation.

 

X X

 

 

 

 

 

 

 

 

 

 
Policy Notes:

 

  1. Academic Integrity: The current edition of the SPU Undergraduate Catalog describes the University’s commitment to academic integrity, which is breached by academic dishonesty of various kinds. Among these is turning in another’s work as your own and committing plagiarism, which is the copying of portions of another’s words from a published or electronic source without acknowledgement of that source.  The penalty for a breach of academic integrity is a failing grade for the work in question on the first offense and a failing grade for the course as a whole with repeated offenses.
  2. Extra credit: See #8.
  3. Attendance: Mandatory. Roll will be taken every class. Please email me if you are absent.
  4. Exam policy: Exams cannot be rescheduled except in the case of mitigating circumstances which in my judgment warrant rescheduling the exam. For the final exam, if you have two or more exams scheduled on the same day as this class’s final, you and I may reschedule this exam at a mutually convenient time prior to the scheduled exam period; although I am under no obligation to reschedule and so I recommend that you also check in with your other instructors to see if they might be willing to reschedule.  Additionally, as with other exams, if you have a mitigating circumstance you may request to take the final exam early if you send an e-mail to me at least two weeks before the regularly scheduled final exam period to reschedule.  If I agree to reschedule your final exam, you can expect that it will occur no earlier than four working days prior to the last day of the final examination period.
  5. Due dates are firm; exceptions will be made only for dire illness or emergencies, not poor planning or lots of work.
  6. Grades for late work will be lowered one grade (from A to A-) for each 24-hour period, including weekends.
  7. Disability statement: In accordance with Section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990, students with specific disabilities that qualifies for academic accommodations should contact Disabled Student Services (DSS) in the Center for Learning. DSS in turn will send a Disability Verification Letter to the course instructor indicating what accommodations have been approved.
  8. Course Evaluation:  Plan on completing the online evaluation of this course and its instructor in a thoughtful and constructive manner.  I am the chief recipient of your feedback so feel free to address your comments to me. Your evaluation is used to make improvements in the course, and I will use your feedback when selecting resources, designing teaching methods and preparing assignments.  Courses are evaluated using the Banner Course Evaluation System.  All responses are completely confidential - your name is not stored with your answers in any way. In addition, I will not see any results of the evaluation until after my final grades are submitted to the University. Forward the email you receive after completing the evaluation, and one of your quizzes will be dropped.
  9. Inclement Weather or other university closing: In the event of inclement weather or an emergency that might close the university, check the SPU website. You may also call the emergency closure hotline (206-281-2800). Both will be updated before 6:00 a.m.  Please insure that you have updated your emergency information into banner so that you can receive a text if other university emergencies arise.
  • Emergency: Please familiarize yourselves with the emergency information posted on the wall of the classroom. Our evacuation site is indicated there.

 

 

 

 

 

 

 

 

Emergency Preparedness Information

 

Report an Emergency or Suspicious Activity

Call the Office of Safety and Security to report an emergency or suspicious activity by dialing 206-281-2911 or by pressing the call button on a campus emergency phone. SPU Security Officers are trained first responders and will be dispatched to your location. If needed, the SPU Dispatcher will contact local fire/police with the exact address of the location of the emergency.

 

SPU-Alert System

The SPU-Alert System is SPU’s emergency notification system.  It can send information via text message, email, electronic reader board, computer pop-ups (for SPU computers), loudspeaker, and recorded cell phone messages. Text messaging has generally proven to be the quickest way to receive an alert about a campus emergency.  In order to receive text messages from SPU-Alert, you must provide SPU with your cell phone number through the Banner Information System on the web, https://www.spu.edu/banweb/.  Select the Personal Menu then choose the Emergency Alert System tab. Contact the CIS Help Desk if you have questions about entering your personal contact information into the Banner Information System. Emergency announcements may also be made by SPU staff members serving as Building Emergency Coordinators (“BECs”).

 

Lockdown / Shelter in Place – General Guidance

The University will lock down in response to threats of violence such as a bank robbery or armed intruder on campus. You can assume that all remaining classes and events will be temporarily suspended until the incident is over. Lockdown notifications are sent using the SPU-Alert System.
If you are in a building at the time of a lockdown:

  • Stay inside and await instruction, unless you are in immediate visible danger.
  • Move to a securable area (such as an office or classroom) and lock the doors.
  • Close the window coverings then move away from the windows and get low on the floor.
  • Remain in your secure area until further direction or the all clear is given (this notification will be sent via the SPU-Alert System).

 

If you are outside at the time of a lockdown:

  • Leave the area and seek safe shelter off campus. Remaining in the area of the threat may expose you to danger.
  • Return to campus after the all clear is given (this notification will be sent via the SPU-Alert System).

 

Evacuation – General Guidance

Students should evacuate a building if the fire alarm sounds or if a faculty member, a staff member, or the SPU-Alert System instructs building occupants to evacuate.  In the event of an evacuation, gather your personal belongings quickly and proceed to the nearest exit. Most classrooms contain a wall plaque or poster on or next to the classroom door showing the evacuation route and the assembly site for the building. Do not use the elevator.

 

Once you have evacuated the building, proceed to the nearest evacuation assembly location. The “Stop. Think. Act.” booklet posted in each classroom contains a list of assembly sites for each building. Check in with your instructor or a BEC (they will be easily recognizable by their bright orange vests). During emergencies, give each BEC your full cooperation whenever they issue directions.

 

Additional Information

Additional information about emergency preparedness can be found on the SPU web page at http://www.spu.edu/info/emergency/index.asp or by calling the Office of Safety and Security at 206-281-2922.  
Tentative Schedule

 

 

Tuesday, September 29, 2015 Introduction, Chapter 2: How to Calculate Present Values
Thursday, October 1, 2015 Chapter 5: NPV and Other Investment Criteria
Friday, October 2, 2015 Last Day to Register or Add Classes
Tuesday, October 6, 2015 Chapter 6: Making Investment Decisions with the NPV Rule
Thursday, October 8, 2015 Chapter 9: Risk and the Cost of Capital, Quiz
Tuesday, October 13, 2015 Chapter 10: Project analysis
Thursday, October 15, 2015 Chapter 12: Agency Problems, Compensation, and Performance Measurement; Quiz
Tuesday, October 20, 2015 Chapter 14: An Overview of Corporate Financing
Thursday, October 22, 2015 Chapter 15: How Corporations Issue Securities, Quiz
Tuesday, October 27, 2015 Chapter 16: Payout Policy
Thursday, October 29, 2015 Chapter 17: Does Debt Policy Matter?, Rough draft of paper due
Tuesday, November 3, 2015 Chapter 18: How Much Should a Corporation Borrow?
Thursday, November 5, 2015 Chapter 19: Financing and Valuation, Quiz
Friday, November 6, 2015 Last Day to Withdraw
Tuesday, November 10, 2015 Chapter 28: Financial Analysis
Thursday, November 12, 2015 Chapter 29: Financial Planning, Quiz
Tuesday, November 17, 2015 Chapter 30: Working Capital Management
Thursday, November 19, 2015 Chapter 31: Mergers, Rough draft of presentation due
Tuesday, November 24, 2015 Chapter 34: Conclusion: What We Do and Do Not Know about Finance
Thursday, November 26, 2015 College Closed - Thanksgiving
Tuesday, December 1, 2015 Wrap-up / review
Thursday, December 3, 2015 Quiz and group work on papers/presentations
Wednesday, December 9, 2015 Papers due, Presentations from 8-10

 

 

The above schedule, policies, and assignments in this course are subject to change in the event of extenuating circumstances or by mutual agreement between the instructor and the students.

 

 

 

 

 

 

 

 

 

 

 

 
Company Analysis Assignment

Analyze the financial and business decisions of a public company of your choice (receive approval from professor). Start by giving some background information about the company. Then analyze four major decisions made by the company and the outlook for its stock. Can the company increase its value by changing any of its financial policies?

 

  1. Background

 

Year of incorporation

Year of initial public offering (IPO)

Current business (include sales breakdown by lines of business)

Brief history (including major acquisitions)

Exchange listing

Ownership structure (% of equity owned by Institutions, and by Officers and Directors;

Names of, and % of equity owned by, the two largest blockholders)

Analyst following (Number, Firm Names if only a few analysts follow the stock)

Board structure [% of directors that are: insiders (employee), outsiders but affiliated (e.g., ex-employees, customers, suppliers or service providers, e.g., the firm's lawyers, bankers, consultants, etc.), independent]

 

  1. Capital Structure

 

Compute the capital structure of the firm as follows for each of the last 3 years. Use market values of common stock and preferred stock, and book value of long-term debt.

$m                                                                  %

Long-term Debt, D

Preferred Stock, P

Common Stock, S

Firm Value, V = D + P + S                                                                                               100

 

  • Analysis
  • How does the capital structure of the company compare with its industry?
  • Can you explain the company's choice of capital structure?
  • Do you agree with the company's choice? Why or why not?
  • Can the company increase its value by changing its capital structure? Explain.

 

  1. Dividend Policy

 

Compute the dividend per share, earnings per share, stock price, payout ratio, and dividend yield at the end of each of the last 3 years for the company. Then answer the four questions in item 2, as they relate to the company's dividend policy (as measured by the payout ratio and dividend yield).

 

 

 

  1. Growth

 

  • Growth rate in firm size (Sales, Total assets, Firm value, Number of employees) over the last 5 years.
  • Lines of business that have grown, stayed the same, vs. shrunk over the last 3 years.
  • Lines of business that are expected to grow vs. stay the same vs. shrink in the future.
  • How much of the growth is internal vs. through acquisitions? How does the company's choice compare with its industry? Does the company's choice make sense? Explain.

 

 

  1. Liquidity Policy

 

Compute the Cash, Quick and Current ratios at the end of each of the last 3 years. These are the ratios to Current Liabilities of: Cash and Marketable Securities, (Current Assets -Inventories), and Current Assets. Then answer four questions in item 2, as they relate to the company's liquidity choice.

 

  1. Stock Outlook over the next 1, 3 and 5 years

 

  • How has the stock performed relative to the market and industry over the last 3 years?
  • What is the lagged and leading P/E?
  • What are the prospects for business and earnings growth?
  • What do the analysts say?
  • What do you think?
  • Is there anything that you would do to improve the company's valuation? How is the profitability of the various lines of business? Does the company have any hidden assets (e.g.,a Sears Tower) that you think are not incorporated in the stock price?

 

Data sources (Partial list)

Computer Databases

Mergent Online: Financial information and annual reports of public companies

OneSource: Analyst reports

Morningstar Document Research (formerly 10-K Wizard): SEC filings

Factiva: Business news and company profiles

Bloomberg: Comprehensive investment information

Hoover’s Online: In-depth profiles of companies and industries

Web sites

SEC's Edgar database: www.sec.gov

Yahoo! Finance: http://quote.yahoo.com

Print sources

Moody's manuals (Industrial, Transportation, Public Utility, Bank and Finance)

Value Line Investment Survey

Standard and Poor’s

Million Dollar Directory

Periodicals: Wall Street Journal, Money magazine, etc.

Presentation Evaluation Form

Team Name:

 

Rating: Excellent (5); Good (4); Average (Needs Improvement) (3); Fair (2); Poor (1)

 

Content (2/3 Weight)

How well does the presentation cover these content areas?

 

Economic outlook

Industry analysis

Background

Capital Structure

Dividend policy

Growth

Liquidity policy

Stock outlook

Average

Average x 2/3

 

Presentation (1/3 Weight)

How effective is the presentation?

 

Has attention getter in the introduction

Demonstrates genuine enthusiasm for the work

Establishes rapport with the audience

Organization is clear, logical, and structured

Visual aids clarify and emphasize main points

Varies voice with volume, pitch, and tone

Eye contact effective

Presents as professional, courteous, and authentic

Transitions supporting and smooth

Conclusion gives sense of closure

Average

Average x 1/3

 

Average Weighted Score

 

 

 

 

Presenter Evaluation Form

NOT including yourself, list your teammates and divide 100 points among them as you see fit. IF the points are not spread equally, please explain why.