Financial Management (DLMBFNE01)

Course No.:

DLMBFNE01

Course Title:

Financial Management

Hours Total:

150 h

Credit Points:

5 ECTS

Course Type: Pflicht

Course Availability: WS, SS

Course Duration: 1 Semester

Admission Requirements:

Please see module description.

Course Coordinator / Instructor:

See current list of tutors in the Learning Management System

References to Other Modules:

Please see module description

Course Description:

Finance managers working within companies are tasked with managing and controlling a company’s finances and investment activities; they play a key role in a firm from the perspective of capital market participants.

This course provides an introduction to corporate finance and financial management. Students will gain insight into topics that are highly relevant in practice such as the goals and objectives of financial management within a company, measures for financial control, and the basic functions of capital markets. Basic tools of financial analysis such as the calculation of cash flows are also introduced. The course covers aspects regarding the determination of a company’s optimal capital structure and costs related to different financing options. Students will also be introduced to the basics of options theory and options pricing as well as the practical application of options in a company.

Course Objectives and Outcome:

On successful completion of this course, students will be able to:

• recognize and evaluate different equity and debt financing alternatives as well as internal and external sources of funding.
• recognize the role that financial markets play in providing funding for companies and how these markets interact with companies.
• explain the tension between risk and return.
• recognize the importance of portfolio diversification and utilize the capital asset pricing model (CAPM) to evaluate financial instruments together with costs of capital.
• describe options, option pricing, and how options are used in financial management.
• critically discuss questions regarding the optional capital structure of a company from a theoretic and practical perspective.

Course Content:

1 Introduction to Financial Management

1.1 The Role of the Financial Management

1.2 Goals of Financial Management

1.3 Role of Financial Markets

2 Legal Business Forms and Corporate Governance

2.1 Legal Business Forms

2.2 Corporate Governance

2.3 Principal-Agent-Problem in Corporations

3 Long-Term Financial Planning

3.1 Equity vs. Debt Financing

3.2 External vs. Internal Financing

3.3 Organizational Growth and Financial Planning

4 Discounted-Cash-Flow Valuation

4.1 Single-Period Horizon

4.2 Multi-Period Horizon

4.3 Business Valuation

5 Risk vs. Return

5.1 Return

5.2 Risk

5.3 Risk and Return of Portfolios

5.4 Diversification

5.5 Capital Market Line

6 Options

6.1 Introduction to Options

6.2 Option Pricing Basics

6.3 Equity as Option

7 Capital Structure

7.1 Leverage Effect

7.2 Modigliani-Miller Propositions

7.3 Optimal Capital Structure

7.4 Capital Structure Policy

Literature:

• Brealey, R. A., & Myers, S. C. (2010). Principles of corporate finance (10th ed.). London: McGraw-Hill.
• Madure, J. (2008). International finance management (9th ed.). Boston, MA: Cengage Learning.
• Hillier, D., Ross, S. A., Westerfield, R. W., Jaffe, J., & Jordan, B. D. (2010). Corporate finance (European ed.). London: McGraw-Hill.
• Weaver, S. C., & Weston J. F. (2008). Strategic financial management: Applications of corporate finance. Mason, OH: Thomson South-Western.
• Brealey, R. A., Myers, S. C., Myers, S., & Brattle Group. (2003). Financing and risk management. New York: McGraw Hill Professional.
• Calder, A. (2008). Corporate governance: A practical guide to the legal frameworks and international codes of practice. London: Kogan Page Publishers.
• Brigham, E., & Ehrhardt, M. (2016). Financial management: Theory & practice. Cengage Learning.
• Vernimmen, P., Quiry, P., Dallocchio, M., Le Fur, Y., & Salvi, A. (2014). Corporate finance: Theory and practice (4th ed.) Hoboken, NJ: John Wiley & Sons.

Prerequisites to Qualify for Assessment:

• Depending on the course: Completion of online knowledge tests (approx. 15 minutes per unit, pass/not pass)
• Course evaluation

Assessment:

Exam, 90 min.

Student Workload (in hours): 150

Self-study: 90
Self-testing: 30
Tutorials: 30