Financial Management: Theory and Application 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) Dr. Windijarto, MBA. Dr. Fitri ismiyanti, SE, MSi. Dr. Andry Irwanto, SE., MBA., Ak., CMA., CA. Learning outcomes of the course unit Graduate Learning Outcomes Demonstrating responsible attitude in their field of expertise independently Mastering the theoretical concepts, methods and analysis tools of the Financial Management function Being able to compose and communicate ideas, thoughts and scientific arguments responsibly 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 Being able to develop the governance implementation of financial management in business entities Being able to solve complex middle-level financial management problems through an inter or multidisciplinary approach Being able to develop model for solving financial management problems 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 What is corporate finance? The corporate firm The finance functions The goal of financial management The relationship between finance function and the goal of financial management The problem of agency and control of the corporation Financial market and the corporation Topic 2 – Risk and Return: A Study of Market History Return (dollar return, percentage return) Holding period return Return for individual securities Average stock return and risk-free rate Risk statistics Topic 3 – Risk and Return: Capital Assets Pricing Model (CAPM) Return for Individual securities Expected return, variance, and covariance Return and risk for portfolio The efficient set for two assets The efficient set for many securities Diversification The risk-free borrowing and lending relationship between risk and expected return (CAPM) Topic 4 – Net Present Value and Other Investment R ules Payback period and discounted payback period Net Present Value (NPV) Internal Rate of Return (IRR) Profitability index Topic 5 – Taking Capital Investment Decision Incremental cash flows The example incremental cash flows Mutually exclusive project Project with different size Capital rationing Project with unequal lives Topic 6 – Project Analysis and Evaluation Sensitivity analysis Scenario analysis Break-even analysis Real option Decision trees Topic 7 – Cost of Capital Cost of common stock Cost of preferred stock Cost of debt Cost of retained earning Weighted Average Cost of Capital (WACC) Marginal cost of capital Topic 8 – Capital Structure: Basic Concept The capital structure question and pie theory Maximizing firm value in comparison with maximizing stockholder interests Financial leverage and firm value Modigliani and Miller: Position II Taxes and capital structure Topic 9 – Capital Structure: Debt Usage Limit Cost of financial distress Description of financial distress costs Can cost of debt be reduced? Integration of tax effects and financial distress costs Signaling The Pecking-Order Theory Growth and the debt – equity ratio Personal taxes How firms establish capital structure Topic 10 – Dividends and Other Payouts Different types of payouts Standard method of cash dividend payment The benchmark case: an illustration of the relevance of dividend policy Repurchases of stock Real-world factors favoring a high dividend policy The clientele effect Stock dividend and stock splits Topic 11 – Leasing Types of leases Accounting and leasing Taxes and leases The cash flows of leasing NPV analysis of the lease-versus by decision Debt replacement and lease valuation Reason for leasing Topic 12 – Mergers, Acquisitions, and Divestitures The basic forms of acquisitions Two financial side effect of acquisitions A cost to stockholders from reduction in risk The NPV of merger Friendly versus hostile takeovers Do mergers enhance value? The tax forms of acquisition Accounting for acquisitions Topic 13 – Financial Distress What is financial distress What happens in financial distress Bankruptcy liquidation and reorganization Which one is the best? Private workout or bankruptcy Prepackaged bankruptcy Predicting corporate bankruptcy Firm reorganization Topic 14 – International Corporate Finance Terminology Foreign exchange markets and rates Purchasing power parity Interest rate parity International capital budgeting Exchange rate risk 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 learning process through structured classroom activities. Language of instruction Bahasa Indonesia Assessment methods and criteria Midterm Exam: 25% Final Exam: 25% Literature Review (Mid & Final): 25% Critical Review: 15% Resume: 10% © FIBAA – September 2021