CORPORATE FINANCE

The "Corporate Finance" course is core educational activity for students of the degree course in International Trade and Tourism. 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, examples and business cases) 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 are expected to have achieved the learning objectives and to have passed (propaedeutic subjects) the exam of Economia Aziendale (https://www.unive.it/web/en/4347/exams ). In particular, students should be familiar with financial statements and their reclassification schemes. Moreover, students are expected to know mathematical concepts like “present/future value”, the rules of interest compounding and statistical concepts like mean, 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

Create, Finanza Aziendale, McGraw-Hill Customized Publishing, 2023 (available by Libreria San Leonardo)

The exam is written and consists of 3 parts: 10 multiple choice questions (1 point for each correct answer; no penalty in case of error or missed answer), one open question (evaluated with a maximum score of 10 points), one exercise (evaluated with a maximum score of 11 points). The final grade is the sum of the scores of the three parts.

Regarding the grading scale (how grades will be assigned), regardless of attending or non-attending mode:
A. Scores in the range of 18-22 will be assigned when:
- Adequate knowledge and applied understanding in reference to the curriculum are demonstrated.
- Limited ability to collect and/or interpret data and formulate independent judgments.
- Sufficient communication skills, especially regarding the use of specific language related to the economic functioning of public services.

B. Scores in the range of 23-26 will be assigned when:
- Good knowledge and applied understanding in reference to the curriculum are demonstrated.
- Fair ability to collect and/or interpret data and formulate independent judgments.
- Adequate communication skills, especially regarding the use of specific language related to the economic functioning of public services.

C. Scores in the range of 27-30 will be assigned when:
- Good or excellent knowledge and applied understanding in reference to the curriculum are demonstrated.
- Reasonable or excellent ability to collect and/or interpret data and formulate independent judgments.
- Fully appropriate communication skills, especially regarding the use of specific language related to the economic functioning of public services.

D. Honors will be granted when there is excellent knowledge and applied understanding in reference to the curriculum, exceptional judgment, and communication skills.

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.

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