Investment and capital structure decisions

EM365M73A1

Semestre
A
Discipline
Finance
Volume horaire
20 H
Nombre de places
100
Ouvert aux visitants
Oui
Langue
EN
Responsable
Enrico PRINZ

Liste des intervenants

Intervenant(s) Email Volume horaire CM
Enrico PRINZ enrico.prinz@em-strasbourg.eu 20 h

Contribution pédagogique du cours au programme

Aucune contribution pédagogique associé à ce cours pour ce programme.

Descriptif

The lecture aims to offer students a comprehensive overview about the complexity of investment and financing decisions of firms. After an introduction, class participants will deal with major investment decision methods and discuss their respective strengths and weaknesses. Will be presented, in a second step, techniques to transform accounting numbers into free cash flows. The chapter will be completed with an in-depth presentation of risk-princing methods and the estimation of a firm's cost of capital. The following chapter will be focused on capital structure decisions. After a recall of possible financing solutions, students will discover the assumptions of Modigliani & Miller in a perfect market. Based upon this knowledge, the scope of the financial leverage and its limits will be introduced and discussed whereas a particular focus will be set on the question of an optimal capital structure. The last part of the course adresses the question of value creation. Will be introduced and compared here the most frequently used performance indicators. The class finishes with a synthesis of possible payout policies and their consequences for shareholders. To bridge the gap between theory and practice, students will do numerous exercises throughout the lecture.

Organisation pédagogique

Face-to-face

- Lectures

In group

- Exercises

Interaction

Aucun élément de cette liste n'a été coché.

Others

Aucun élément de cette liste n'a été coché.

Objectifs pédagogiques

Cognitive domain

A l'issue du cours, l'étudiant(e) devrait être capable de / d'...
  • - (niv. 2) explain the impact of globalized corporate governance on businesses by emphasizing the link between governance and corporate finance.
  • - (niv. 3) employ the most frequently applied investment decision methods while taking into account their respective strengths and weaknesses.
  • - (niv. 3) carry out a project's incremental earnings forecast and their transformation into free cash flow expectations.
  • - (niv. 3) operate with and criticize the most commonly applied indicators for measuring a firm’s value creation.
  • - (niv. 4) compare a firm's major financing solutions under a risk-return perspective.
  • - (niv. 4) point out the key determinants of the financial leverage effect and a firm’s chosen capital structure.
  • - (niv. 5) estimate the cost of equity, cost of debt, and cost of capital of firms by using their respective accounting/financial documentation and a spreadsheet software.
  • - (niv. 5) evaluate possible payout policies from a shareholder wealth perspective.

Affective domain

A l'issue du cours, l'étudiant(e) devrait être capable de / d'...
Aucun affective domain n'a pour le moment été associé à ce cours.

Objectifs de développement durable abordés

Aucun objectif de développement durable n'a été coché.

Plan / Sommaire

I General introduction (½h) 1. Raison d'être of firms 2. Corpoate finance put in a nutshell II Investment decisions (9h) 1. Net present value method and internal rate of return 2. Alternative selection methods 3. Practice of capital budgeting or the transition from profit numbers to free cash flows 4. Risk pricing and cost of capital III Capital structure decisions (6h) 1. Funding sources and financing solutions 2. Capital structure in a perfect market 3. Market imperfections and limits of debt use 4. Optimal capital structure IV Value creation and payout policy (4h) 1. Measuring wealth creation for investors 2. Payout policy choices V General conclusion (½h)

Prérequis nécessaires

Connaissances en / Notions clés à maîtriser

- Fundamentals of accounting (Financial statements & related principles) - Fundamentals of corporate finance (Financing sources & underlying principles) - Basic knowledge in economics

Supports pédagogiques

Mandatory tools for the course

- Computer
- Calculator

Documents in all formats

Aucun élément de cette liste n'a été coché.

Moodle platform

- Upload of class documents

Software

Aucun élément de cette liste n'a été coché.

Additional electronic platforms

Aucun élément de cette liste n'a été coché.

Bibliographie recommandée

Ouvrages principaux

- BERK, Jonathan / DE MARZO, Peter / HARFORD, Jarrad (2022): Fundamentals of Corporate Finance, Prentice Hall, 5rd ed. (or previous editions) - DAMODARAN, Asworth (2015) : Applied Corporate Finance, John Wiley & Sons, 4th ed.

Littérature complémentaire

- BREALEY, Richard / MYERS, Stewart / ALLEN, Franklin (2022): Principles of Corporate Finance, McGraw Hill, 14th ed. - HILLIER, David / ROSS, Stephen / WESTERFIELD, Randolph / JAFFRE, Jeffrey / JORDAN, Bradford (2020) : Corporate Finance, McGraw Hill, 4rd ed. - VERNIMMEN, Pierre / QUIRY, Pascal / LE FUR, Yann (2022): Finance d'entreprise, Dalloz, 20th ed.

Travaux de recherche de l'EM : Veillez à mobiliser au moins une ressource

Peuvent être renseignés les manuels coordonnés, les traductions de manuel, les études de cas traduites etc…
- none

Modalités d'évaluation

Liste des modalités d'évaluation

Evaluation finaleSemaine d'examens
Ecrite (120 min) / individuelle / Anglais / pondération : 100 %
Cette évaluation sert à mesurer LO1.1, LO1.2, LO1.3, LO2.2
Aucune modalité d'évaluation n'a pour le moment été attribuée à ce cours.