Course unit title

Financial Management: Theory and Application

Course unit code

MNK601

Type of course unit (compulsory, optional)

Compulsory

Level of course unit (according to EQF: first cycle Bachelor, second cycle Master)

Level 7 – Second Cycle Degree (Master)

Year of study when the course unit is delivered (if applicable)

-

Semester/trimester when the course unit is delivered

1

Number of ECTS credits allocated

4.8

Name of lecturer(s)
  1. Dr. Windijarto, MBA. 
  2. Dr. Fitri Ismiyanti, SE, MSi.
  3. Dr. Andry Irwanto, SE., MBA., Ak., CMA., CA.

Learning outcomes of the course unit

Graduate Learning Outcomes

  1. Demonstrating responsible attitude in their field of expertise independently
  2. Mastering the theoretical concepts, methods and analysis tools of the Financial Management function
  3. Being able to compose and communicate ideas, thoughts and scientific arguments responsibly
  4. Being able to make decisions in order to solve the problems for the development of science and technology in the field of financial management based on a study of community needs
  5. Being able to develop the governance implementation of financial management in business entities     
  6. Being able to solve complex middle-level financial management problems through an inter or multidisciplinary approach
  7. Being able to develop models for solving financial management problems
  8. Being able to evaluate the implementation of financial management in business entities

Course Learning Outcomes

After completing this course, students are expected to be able to elaborate the scope of financial management, identify, analyze and solve financial problems . This course also encourages students to apply methods or techniques in order to create corporate financial decisions related to investment and long-term expenses, mergers, acquisitions and company reorganizations.

Mode of delivery (face-to-face, distance learning)

Distance Learning (due to the pandemic situation)

Prerequisites and co-requisites (if applicable)

-

Course content

Topic 1 – Introduction to Corporate Finance

  1. What is corporate finance?
  2. The corporate firm
  3. The financial functions
  4. The goal of financial management
  5. The relationship between financial function and the goal of financial management
  6. The problem of agency and control of the corporation
  7. Financial markets and the corporation

Topic 2 – Risk and Return: A Study of Market History

  1. Return (dollar return, percentage return)
  2. Holding period returns
  3. Return for individual securities
  4. Average stock return and risk-free rate
  5. Risk statistics

Topic 3 – Risk and Return: Capital Assets Pricing Model (CAPM)

  1. Return for Individual securities
  2. Expected returns, variance, and covariance
  3. Return and risk for portfolios
  4. The efficient set for two assets
  5. The efficient set for many securities
  6. Diversification
  7.       The risk-free borrowing and lending relationship between risk and expected return (CAPM)

Topic 4 – Net Present Value and Other Investment R ules

  1. Payback period and discounted payback period
  2. Net Present Value (NPV)
  3. Internal Rate of Return (IRR)
  4. Profitability index

Topic 5 – Taking Capital Investment Decisions

  1. Incremental cash flows
  2. The example of incremental cash flows
  3. Mutually exclusive project
  4. Projects with different sizes
  5. Capital rationing
  6. Project with unequal lives

Topic 6 – Project Analysis and Evaluation

  1. Sensitivity analysis
  2. Scenario analysis
  3. Break-even analysis
  4. Real options
  5. Decision trees

Topic 7 – Cost of Capital

  1. Cost of common stock
  2. Cost of preferred stock
  3. Cost of debt
  4. Cost of retained earnings
  5. Weighted Average Cost of Capital (WACC)
  6. Marginal cost of capital

Topic 8 – Capital Structure: Basic Concept     

  1. The capital structure question and pie theory
  2. Maximizing firm value in comparison with maximizing stockholder interests
  3. Financial leverage and firm value
  4. Modigliani and Miller: Position II
  5. Taxes and capital structure

Topic 9 – Capital Structure: Debt Usage Limit

  1. Cost of financial distress
  2. Description of financial distress costs 
  3. Can the cost of debt be reduced? 
  4. Integration of tax effects and financial distress costs
  5. Signaling
  6. The Pecking-Order Theory
  7. Growth and the debt – equity ratio
  8. Personal taxes
  9. How firms establish capital structure

Topic 10 – Dividends and Other Payouts 

  1. Different types of payouts
  2. Standard method of cash dividend payment
  3. The benchmark case: an illustration of the relevance of dividend policy
  4. Repurchase of stock
  5. Real-world factors favoring a high dividend policy
  6. The clientele effect
  7. Stock dividends and stock splits

Topic 11 – Leasing

  1. Types of leases
  2. Accounting and leasing
  3. Taxes and leases
  4. The cash flows of leasing
  5. NPV analysis of the lease-versus by decision
  6. Debt replacement and lease valuation
  7. Reason for leasing

Topic 12 – Mergers, Acquisitions, and Divestitures

  1. The basic forms of acquisitions
  2. Two financial side effects of acquisitions
  3. A cost to stockholders from reduction in risk
  4. The NPV of mergers
  5. Friendly versus hostile takeovers
  6. Do mergers enhance value?
  7. The tax forms of acquisition
  8. Accounting for acquisitions

Topic 13 – Financial Distress

  1. What is financial distress
  2. What happens in financial distress
  3. Bankruptcy liquidation and reorganization
  4. Which one is the best? Private workout or bankruptcy      
  5. Prepackaged bankruptcy
  6. Predicting corporate bankruptcy
  7. Firm reorganization

Topic 14 – International Corporate Finance

  1. Terminology
  2. Foreign exchange markets and rates
  3. Purchasing power parity
  4. Interest rate parity
  5. International capital budgeting
  6. Exchange rate risk
  7. Political risk

Recommended or required reading and other learning resources/tools

Ross Stephen A; Westerfield Randolph W; Jaffe Jefferey; Corporate Finance, Ninth Edition; McGraw-Hill, Singapore; 2010

Planned learning activities and teaching methods

The course is conducted online along with the combination of classical lectures, interactive discussions, presentations, and case study analysis. The purpose of using various teaching methods is encouraging the students to contribute in the learning process through structured classroom activities.

Language of instruction

Indonesian 

Assessment methods and criteria
  1. Midterm Exam: 25%
  2. Final Exam: 25%
  3. Literature Review (Mid & Final): 25%
  4. Critical Review: 15%
  5. Resumes: 10%





© FIBAA – September 2021