CORPORATE FINANCE

“Corporate Finance” is one of the core courses within the degree program in Business Administration and Management. The main goal of the course is to provide students with a basic understanding of how to manage money in a company, being able to identify the solutions that allow its transformation into new market value. In this view, the financial function is not only in charge of the capital provision decisions but it also contributes to create the company competitive advantage, balancing capital provision with its efficient allocation.
In fact, the main educational goal of the course is to stress that the value of capital depends on the ability to generate operating cash flows in line with the risk-return expectations of all stakeholders. According to this perspective, the long-term equilibrium of the company can be achieved only if all stakeholders’ interests are satisfied, without discriminating or egoistically excluding some of them.
More specifically, the main contents of the course will focus on the computation and interpretation of the historical (cash flow statement) and future (budget) cash flows, on the valuation of stocks and bonds, on the capital budgeting decisions and on the estimation of the company cost of capital. All these topics will be presented on a theoretical and practical basis, allowing students to develop the quantitative skills necessary to cope with the main corporate financial decisions.

The participation to the activities proposed for the course (frontal classes, in presence and online assignments) and the personal workload will allow students to:

1. Knowledge and understanding
• Acquire knowledge of the basic models of corporate finance and, moreover, understand the key-mechanisms behind the analyses and forecast of historical and prospective cash flows and capital provision/allocation decisions

2. Applying knowledge and understanding
• Be able to analyze and evaluate the financial equilibrium of a company
• Be able to evaluate the financing and investment decisions
• Be able to identify the correct risk-return relation
• Be able to estimate the correct cost of capital for the company

3. Judgmental capabilities
• Critically evaluate the capital budgeting decisions, choosing the most proper method
• Critically evaluate the financial sustainability of the corporate investments
• Evaluate the financial soundness of the company and its ability to maintain its economic and financial equilibrium in the medium-short term horizon

4. Communication abilities
The course will allow students to enhance their communication abilities through the knowledge of the technical language in the corporate finance field.

5. Learning abilities
The course will increase the students’ ability to integrate the study of the book with practical exercises/cases, in person and online.

Students must have passed the "Business Economic" ("Economia Aziendale") exam. In particular, the student should know the financial statements (balance sheet and income statement) and the related reclassifications. Furthermore, students must know mathematical concepts such as "present value" and "future value" and the rules for capitalization of interests (simple and compound), as well as statistical concepts of average, variance and standard deviation.

1. Introduction to the course and presentation of the Corporate Finance Circuit
2. Computation of historical cash flows and analysis of the financial equilibria
3. Computation of the future cash flows: the budget
4. Capital budgeting decisions: the Net Present Value method (NPV)
5. Other criteria for the capital budgeting decisions and applications (Equivalent Annual Cost)
6. Bonds valuation
7. Stocks valuation
8. The risk-return relation: the Capital Asset Pricing Model (CAPM)
9. The risk-return relation in the capital budgeting decision
10. The capital structure decisions
a. Basic principles
b. The Modigliani-Miller theorem with corporate taxation

Finanza Aziendale, 2018, McGraw-Hill, Customized Publishing (available by the bookshop Cafoscarina starting from September).

The exam is written and made of three parts: 10 multiple-choice questions (no penalties for unanswered questions or wrong answers), 1 open question, 1 exercise. Each part is graded on a 30 points basis. The final grade is the average of the three parts.

The course is based on frontal lectures. All materials used during classes will be available to attending students through the Moodle platform.
Lectures combine the presentation of the basic principles in corporate finance with their practical application through exercises and business cases.
The course will benefit of the presence of 1 tutor, who will make extra exercises and help students to get prepared for the exam.

In cases of emergency due to Covid-19 teching and exams could undergo some changes, in order to safeguard students.

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This subject deals with topics related to the macro-area "Human capital, health, education" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development