This course deals with application
of financial management theory.Emphasis is placed on problem solving in differing
economic and situational environments using various quantitative tools.Case
analysis and class discussions are emphasized.Prerequisites:FIN 359 and FIN 360.
College of BusinessMission Statement
To support the economic development
of Southeastern Michigan by preparing graduates to perform effectively in an “information age”
business environment that is being shaped by a global economy AND by helping business leaders understand and address the forces
shaping their environments as they create and recreate businesses.
This course uses the case method
approach to instruction exclusively.Students work in teams to prepare assigned
cases for classroom presentation.It is encouraged and expected that students
will interact extensively with other team members outside of the classroom.The
benefit from such interaction is to develop team spirit and to become familiar with the communication processes operative
in a small work team.
Students will also prepare FIVE written case assignments individually and ONE with their team. This work is designed to help students learn to write organized, well-researched, and
analyzed reports.This exercise also forces students to make recommendations
on specific problems and forces them to be able to defend their positions verbally in front of peers.
Students also are expected to participate
in classroom discussions in order to practice appropriate challenges to other students’ points of view, as well as to
express their own opinions.They learn that there are often many ways of analyzing
issues and other alternative solutions exist to financial problems.Students
learn to evaluate the risks involved in assessing various alternatives involved in decision-making.
All students will present to the
class with their team ONEmajor case analysis.Oral and visual presentation skills are emphasized.
Using the Case Method
Cases are designed to provide a
basis for class discussion.They are not intended to illustrate correct or incorrect
solutions to management problems.Case problems confront students with the necessity
of making decisions.Students must actually think the problem through to a decision,
explain their analyses to classmates, and defend their ideas.The cases used
in FIN 450 present business situations that pose debatable alternative courses of action, that contain problems that can be
narrowed but not resolved by the usual techniques of financial analysis.Judgment
must enter into the process of decision making, so unanimous agreement as to the best decision is neither expected nor desired.This ambiguity also contributes to the initial frustration many students who have
been working with scientific and technical problems in which a mechanistic approach can more frequently be counted on to yield
a single ‘right’ conclusion.Students will also need to be mindful
of the intangible human factors involved in many business situations.Ethical
factors must also be considered when recommending solutions.
Required Textbooks and Cases
Kester, Ruback and Tufano,
Case Problems in Finance, 12th edition, McGraw-Hill Irwin. 2005/
Students must also have a standard financial text (Corporate Finance, Ross Westerfield, and Jaffe), a financial
calculator, and access to the Internet, EXCEL, and Powerpoint.Use of the library’s
resources is encouraged.
Students will be required to analyze
and report on FIVE cases individually and be part of a team that presents and writes ONE major case analysis.The midterm exam will consist of essay questions and problems.Students
will be evaluated on class participation and presentations.
FIVE individual case analyses150 points
Two homework assignments50 points
One major case analysis and presentation75 points
Final Assessment Project50 points
Class Participation25 points
96 -100% A
92 - 95%A-
88 - 91%B+
83 - 87%B
80 - 84%B-
75 - 79 %C+
70 - 74 %C
The instructor will assign students
to a team.The instructor will also assign the major case to be analyzed and
presented by a team.These presentations must be done in a professional
manner, using power point or some other presentation software.
Deadlines for submission of
papers and homework assignments must be met.No late papers will be accepted.Any paper not received by the due date will receive a zero.Every student is expected to prepare every case even if a written assignment is not required in order to
receive class participation points.The contribution of each member of a team
must be specified on the cover page of the final report.
Students will be graded individually
on their case presentation skills.Each student must present a part of the major
team project, but also must be able to answer questions on any part of the analyses.
Presentations must be done in a
professional manner including dress, readable overheads, and in a clear speaking voice.Remember your speech class – eye contact is important and the ability to explain your analysis.Be sure that you can explain any number you present as you may be asked its origin.Ability to answer questions is important especially the questions to which you do not know the answer.
Each team must analyze a real company
and determine if the current stock price is the correct stock price.Attached
is a copy of the project guidelines.The project is due during the time scheduled
for the final exam. The instructor must approve certain parts of the project as the semester progresses.
The team must first choose a company
to analyze and get their choice approved by the instructor.The team must then
gather data on the company following the attached assignment as a guide and again have the instructor approve the data.The final analyses of the stock price will be presented in class by each team during
the final exam period.
Format for Individual Cases
Individual case analyses are equivalent
to preparing an executive summary of the problem. The following format is suggested:
II.Statement Problem – a short
This statement should
briefly outline the problem presented in the case.Case details do not need to
be repeated.The student should assume that the instructor has read the case.It is analogous to writing a report for a supervisor.
III.Analysis of Problem
This section of the
case analysis is where alternative solutions are explored.Pros and cons of different
solutions should be presented.Application of theoretical models will be done
in this section.Quantitative analysis should be done in exhibits and tables
and referenced in this section.
A solution must be recommended
and supported by rational arguments.It is important to be able to articulate
why a certain solution is recommended and to be able to defend it.There is usually
not one correct solution to these case problems. But, there are incorrect solutions.For example, solutions that violate economic principles, or are inconsistent with financial theory, or are based on
inconsistent assumptions, or violate ethical or legal standards are not acceptable solutions.Solutions not supported by data are not acceptable solutions.
The individual case analyses are
due on the day that the team presents the case to the class.
Format for Major Case Analyses
Major case analyses have two parts.One part is a written report and the second part is a presentation of the case analysis
to the class.Every team member must write a section of the report and participate
in the presentation.The paper must be typed, double-spaced and include the following
II.Introduction of Case Problem
should focus on a description of the company and its problem.Any relevant historical
information should be discussed in this section.
This section should
describe any economic trends and industry data that are relevant to making a decision on a solution to the problem presented
in the case.Exhibits are useful tools for displaying these data.It is important to address the importance of the data to the case.Random data collection will be viewed negatively.
III.Analysis of Alternative Solutions
section represents the main body of the analysis and presents the strengths, weaknesses, opportunities,
and threats to the organization.Alternative solutions along with relevant
analyses and exhibits should be discussed.Pros and cons of each solution must be presented with appropriate supporting data.
Major case analysis papers are due on the day of the presentation.Students
be graded also on their ability to present the material in a clear and understandable fashion.Ability to answer questions from other students and the instructor will also be graded.Students not presenting are expected to ask relevant questions to the presenters as part of their participation grade.
Attendance, Late or Missed Assignments,
Deadlines for submission of papers
must be met.No late papers will be accepted.Any paper not received by the due date will receive a zero.Prior consent
of the instructor is required to change due dates and assignments, which may only be given under unusual hardship circumstances.All case analyses must be typed and have a professional appearance. Students must
prepare individual case analyses.Once a case is presented in class writing up
that case is no longer an option.Students cannot write an individual case analysis
on the case they have been assigned to present with their team.
Honesty and personal
integrity are essential values for our educational community. Instances of cheating or plagiarism will result in appropriate
disciplinary action such as receiving an “E” grade for the course, and referral to the Dean of Students for possible
suspension or dismissal from the university. Plagiarism is defined as representing someone else’s work as your own.
All proceedings and appeals shall be conducted in accordance with the EMU conduct code, which appears in the GraduateSchool
Accommodation for Students
In order to receive accommodation for this course, students with disabilities must register with
the Access Services Office in 203 King Hall, 487-2470.
Reminder for F and J Visa Holders:
Under the federal SEVIS (Student and Exchange Visitor) program, F and J visa holders have new requirements
to report to the EMU Office of International Students (OIS), 229 King Hall. You have 10 days to report any changes in your
name, residential address, academic status (full or part-time enrollment), program of study or completion date, student level
(undergraduate to graduate), funding source (employment or graduate assistant position), or intent to transfer to another
university. You may not drop or withdraw from a course without OIS approval. You must also report any probation or disciplinary
action due to a criminal conviction.
Failure to report any of these changes within 10 days to OIS may result in serious consequences
for the student (arrest and deportation) and the university (withdrawal of federal permission to enroll international students).
Contact the OIS at 487-3116, not your instructor.If you have questions or concerns,
(Students are responsible for changes announced in class.)
Presentation by Kate Pittsley, Halle Library
Introduction and Review, Measuring Firm Performance and Proforma Financial Statements
Groups and Cases Assigned
Complete ratio analysis pp. 10-16.Read pp.
1-20.Homework – TireCity Analysis (Due 9/19)
Short Term Sources of Funds and Working Capital Management
Homework – Butler Lumber and Dell
Computer Analyses (Due 9/26)
Debt Policy and Long Term Financing, Capital Structure Decisions
Name of Final Project Company due
Investment Decisions – Project Level – pp.365-367
Cost of capital analysis and divisional hurdle rates pp.435 – 445, 473-481
Loewen Group Presentation
Investment Decisions – Firm Valuation
Super Project Presentation
Review for Midterm
Ratio Analysis Due of Final Project Firm
Valuation of Firms, Acquisition and Merger Analysis