In today’s turbulent business environment, successful finance professionals need to be well equipped to make increasingly complex and challenging operating, investing and financing decisions. While aggressive versus conservative financial management, overvaluation, undervaluation and raising finance are complicated, in today’s international marketplaces and constantly growing market competition, they are more challenging than ever. This corporate finance course will help you develop a strategic understanding of key financial decisions faced by organizations today.
Course Methodology
The course uses a mix of interactive techniques, such as brief presentations by the consultant and the participants, case studies, and group exercises to apply the knowledge acquired throughout the course.
Course Objectives
By the end of the course, participants will be able to:
Recognize the three pillars of corporate finance and distinguish between the different financing resources and investment opportunities
Interpret the cash conversion cycle and predict if the organization is collecting receivables as scheduled, managing inventory properly and settling payables as per market guidelines
Compute the weighted average cost of capital, examine the optimal capital structure and relate the company's dividend policy to its capital structure
Analyze capital investment decisions by applying payback, Net Present Value (NPV), discounted payback and Internal Rate of Return (IRR)
Employ diverse techniques in valuing equities using the income approach, market approach, residual income approach and asset based approach then make relevant investing and financing decisions
Target Audience
Finance professionals, finance managers, corporate controllers, financial controllers, treasury professionals, chief accountants, accounting managers, senior accountants, banking professionals, investment professionals, research analysts and corporate business professionals.
Target Competencies
Understanding operating, investing and financing decisions
Working capital management
Capital investments decision making
Calculating cost of capital
Setting dividend policy
Financial forecasting
Equity valuation
Course Outline
Introduction to corporate finance
Role and scope of corporate finance
Overview on operating decisions: managing current assets and current liabilities
Overview on investing decisions: opportunities and their benefits
Internal investments: replacement project, expansion projects, new products or markets
External investments: stocks, bonds, mergers and acquisitions
Overview on financing decisions: sources and their costs
Internal financing: preferred and common stocks
External financing: straight bonds, convertible bonds, sukuks, term loans and revolving lines of credit
Working capital and the financing decision
Deciding between liquidity versus profitability
Financing current assets: deciding between certainty and profitability
Working capital management styles: aggressive versus conservative
The cash conversion cycle
Cash management: accelerating collection and decelerating disbursements
Analyzing capital investment decisions
Know the 5 key principles in capital budgeting process
Building accurate cash flows forecasts for a correct conclusion
Calculating payback, NPV, discounted payback, and IRR using Excel
How to choose between projects with different useful lives
Capital rationing: allocating limited funds on available projects
Mistakes managers make when evaluating capital projects
Cost of capital and the optimal capital structure
The capital asset pricing model as a tool to calculate required return on equity
Choosing Beta: to identify project's sensitivity
Applying equity risk premium: to calculate return in excess of risk free rate
Calculating the correct Weighted Average Cost of Capital (WACC) for a project
Modigliani-Miller regarding capital structure
Calculating the optimal capital structure
Why company's actual structure fluctuates around its target capital structure
Factors that affect dividend policy
Methods of determining dividend policy:
Stable dividend policy: target dividend rate
Constant dividend rate
Residual dividend method
Effect on stock price after dividend declaration
Financial forecasting, analysis and valuations
Understanding the business: Michael Porter's 5 elements
Revenue forecasting: bottom up versus top down
Techniques for forecasting costs and expenses
Approaches to balance sheet modeling
Methods for public equity valuation: the when and why
Discounted dividend valuation
Estimating the growth rate
Free cash flow valuation: free cash flow to firm and free cash flow to equity
Market based valuation: price and enterprise value multiples
Valuation conclusion used for investing decisions: invest in undervalued equities
Valuation conclusion used for financing decisions: issue your overvalued equities