Corporate Finance Foundations

1h 26mBeginner2019-11-19

Authors

Jim Stice

Professor of Accounting at BYU

Kay Stice

Professor of Accounting at the BYU Marriott School of Management

Course details

The financial choices a company makes can impact its performance and valuation—which makes corporate finance an important topic for executives, managers, and accountants alike. Learn the basics of corporate finance and its impact on decision-making and growth. In this course, professors Jim and Kay Stice lay the foundation for how corporate finance works and make the connections between business activity and finance. They discuss the role of risk in financial decision-making, the benefits of diversification, how short- and long-term financing can impact cash flow and business operations, and the various ways businesses use equity or debt to finance corporate capital. Plus, learn about the mysterious capital asset pricing model, CAPM.

Learning objectives
Describe the activities involved in finance.
Interpret the term “beta” and how it is used in the capital asset pricing model.
Describe how the inflation rate and the risk-free rate are related.
Explain the meaning of capital structure.
Calculate the WACC from the interest rate, rate of return, and capital structure.
Estimate the present value of different payment schemes.

Skills covered

Personal FinanceCorporate FinanceFinance and AccountingFoundationsProfessional Development

Concepts

0. Introduction

01 - Finance for business decision-making

1. What Is Finance

02 - The board of directors discusses finance
03 - Finance inside of companies
04 - Finance outside of companies

2. Risk and Return

05 - What is risk and why don't we like it
06 - Reducing risk through diversification
07 - Beta - The concept
08 - Beta - Examples
09 - Risk-free rate
10 - Equity risk premium
11 - Capital asset pricing model (CAPM)

3. Obtaining Long-Term Financing

12 - Introducing long-term financing
13 - Does capital structure matter
14 - Factors influencing optimal capital structure
15 - Cost of capital - All debt or all equity financing
16 - Cost of capital - Split debt-equity financing
17 - Weighted-average cost of capital

4. Understanding Securities Markets

18 - The difference between a stock and a bond
19 - Stock markets
20 - Bond markets
21 - Publicly traded shares - What impacts the share price
22 - Initial public offering (IPO) - Microsoft

5. Capital Budgeting

23 - Capital budgeting overview
24 - The importance of the time value of money
25 - Example - Buying light switches

Conclusion

26 - Next steps