MBA 509 – Financial Analysis

Course Guide

Fall 2009

Karl W. Einolf, Ph.D.

301-447-5396 x4068

einolf@msmary.edu

http://faculty.msmary.edu/einolf

Office Hours

Course Overview

Students in this course will study financial management and the role of the financial manager within an organization. The course will begin with an introduction to basic financial management and progress to areas of study such as security valuation, risk and return, cost of capital, capital budgeting, equity and debt management, and asset management. Textbook material will be supplemented with case study analysis to integrate the concepts developed in class. Knowledge and use of financial spreadsheets and financial modeling are necessary to fulfill class requirements. Basic internet use and search skills will be required. Prerequisites: undergraduate business finance or MBAP 005, and computer competence.

Click here to see the MBA Learning Objectives

Click here to view a spreadsheet that indicates how the assignments in this course meet the MBA Learning Objectives

Texts: (required)

Block, Stanley B. and Geoffrey A. Hirt.  2007. Foundations of Financial Management, Twelfth Edition.  New York: McGraw-Hill Irwin Publishing. ISBN-13: 978-0073295817.

(You may use an earlier edition of this text to help save you some money! For the eleventh edition, go to any online used bookstore and search for ISBN-13: 978-0072977929.)

Bruner, Robert F. 2007. Case Studies in Finance: Managing for Corporate Value Creation, Fifth Edition. New York: McGraw-Hill Irwin Publishing. ISBN-13: 978-0070636583. (You MUST purchase the fifth edition – it is significantly different than previous editions.)

Please complete the following before the first class!

1. Read Block/Hirt Chapters 1-4

2. Read Bruner Cases 5 and 9

3. Complete an analysis of Case 5: The Financial Detective 2005. Using the financial data and ratios presented in the case, present an analysis of each of the eight industries. Consider the following questions for each of the eight industries:

• How are the two companies in each industry similar/different according to their financial data and ratios?
• Why do you think the two companies are different? (Speculate on their possible product and service offerings, the markets, and their pricing strategies.)
• Guess the name of the company (or at least the type of company).

Also cite any similarities and differences between the different industries. Please only consider the data and ratios provided in the chart. Do not try to calculate any of the ratios on your own. You will find that the data provided doesn’t always generate the ratios provided in the chart. The chart uses adjusted data for sales and assets in order to allow comparisons between the companies and industries.

Your analysis must be completed in a Word document and submitted electronically to the blackboard.msmary.edu web site. It is due by 6pm on the first night of class. Be sure to bring a printed copy with you to class to use for discussion. Your paper should include tables showing comparisons of financial data and ratios. You should be prepared to discuss the questions above with your classmates on the first night of class.

Evaluation

Assignment	Due Date	% Weight
Case 5: Financial Detective	Sep. 2	10%
Case 9: Kota Fibres	Sep. 9	10%
Case 13: Nike	Sep. 16	10%
Rocky Mountain Genome Case	Sep. 23	10%
Case 20,21: Diamond Chemicals	Sep. 30	10%
Case 26: JetBlue Airways	Oct. 7	10%
Case 30: Wrigley Company	Oct. 14	10%
Individual Company Investment Assessment	Oct. 21	10%
Class Participation	All sessions	20%

Grading Scale:

93-100 A 73-76.9 C

90-93 A- 70-72.9 C-

87-90 B+ 0-70 F

83-87 B

80-83 B-

77-80 C+

Course Policies and Procedures

• All assignments are to be submitted to the blackboard.msmary.edu web site by 6pm on the due date in a Word Document. Supporting spreadsheet files may also be submitted by using the “Digital Dropbox.” Please be sure to name the supporting files using your name and the case assignment name.
• When you submit an assignment on the blackboard.msmary.edu web site, the assignment will be analyzed for improper referencing (plagiarism) using a software product called “turn-it-in”. Turn-it-in compares your assignment to documents available online and with assignments turned in by other students (past and present). I have set this system up so that you may view your assignment’s turn-it-in report. In a few minutes (or up to an hour) after you submit an assignment, turn-it-in will examine your paper and produce a report. The report will indicate the level of copying from other sources. Often the copying is inadvertent – you should only be alarmed if the score is in the “red” range. You may resubmit your paper if there is still time before the assignment’s deadline.
• Late assignments (any assignment that is submitted after 6pm on the due date) will receive an automatic 20 point deduction. (All assignments are scored out of 100 points.) There are no exceptions. All assignments must be submitted by October 21, 2009 or a zero will be assigned to each incomplete assignment.
• I reuse cases from semester to semester. You are not permitted to read case study analyses completed by students in past semesters. You are only doing yourself a disservice by doing this as you miss out on the opportunity to do your own intellectual discovery. I consider reading case analyses from past semesters a blatant disregard of academic integrity. If you are caught using past case analyses, I will immediately fail you for the course.
• Your case study analyses are to be completed individually. I encourage you to consult with classmates (in your current class – not in past classes). While consultation between students is permitted, I insist that each student complete their own writing and analysis! So I recommend that you be very careful when consulting with other students. If your work (sentence structure, charts, tables, etc.) looks similar to the work of another student – even if your intent was not to copy – I will fail both of you for the assignment.
• Student obligations extend beyond the text book. Other sources will be needed based upon skills and background of the student.
• Perfect attendance and enthusiastic participation are expected. Your class participation grade constitutes 20% of your grade and will be scored out of 100 points. You will receive a 20 point deduction for your first missed class. Your second missed class will result in an additional 30 point deduction. If you miss three classes, I would like to have you drop the course and take it another time. If the course is not dropped and you have three or more absences, I will assign an F for your final grade.
• Please read the Business Department’s Student Code of Academic Responsibility

Weekly Schedule:

Class # / Date	Topics	Assignments/Readings (Completed by 6pm on class date)
1. Sep. 2	Overview of Financial Management Introduction to Finance Financial Analysis and Planning Case 5: The Financial Detective Case 9: Kota Fibres	Read: Block/Hirt Chapters 1-4 Bruner Cases 5,9 Due: Case 5: Financial Detective
2. Sep. 9	The Cost of Capital Understanding the Cost of Capital Estimating the Cost of Capital Case 13: Nike, Inc.	Read: Block/Hirt Chapter 11 Bruner Cases 12,13 Due: Case 9: Kota Fibres
3. Sep. 16	Time Value of Money and Valuation Time Value of Money Valuation and Rates of Return Rocky Mountain Genome Case Study	Read: Block/Hirt Chapters 9,10 Rocky Mountain Genome Case Due: Case 13: Nike, Inc.
4. Sep. 23	Capital Budgeting and Risk Management The Capital Budgeting Decision Risk and Capital Budgeting Case 17: The Investment Detective Cases 20 and 21: Diamond Chemicals	Read: Block/Hirt Chapters 12, 13 Bruner Cases 17, 20, 21 Due: Rocky Mountain Genome Case
5. Sep. 30	Managing Firm Equity Investment Banking: Public and Private Common and Preferred Stock Financing Dividend Policy and Retained Earnings Case 26: JetBlue Airways eBay, Inc. Case Study	Read: Block/Hirt Chapters 15, 17, 18 Bruner Case 26 Due: Case 20, 21: Diamond Chemicals
6. Oct. 7	Managing Debt Introduction to Debt Policy and Value Structuring Corporate Financial Policy Case 30: Wrigley Company	Read: Bruner Cases 28-30 Due: Case 26: JetBlue Airways
7. Oct. 14	Individual Company Financial Assessment Integration of Financial Concepts Learned Socially Responsible Investing	Due: Case 30: Wrigley Company
8. Oct. 21	All class assignments are due (no class)	Due: Individual Company Investment Assessment