Description: This course will introduce you to the fundamentals of corporate finance. It aims to convey a managerial and analytical level understanding on financial topics such as the time value of money, present value, future value, discounted cash flow, annuities, efficient market  hypothesis, security market line, risk & return and portfolio theory.

 This course features dynamic and engaging video with audio narration, infographics and short quizzes to test your knowledge

Background: The field of finance deals with allocation and expenditure of capital, flow of cash and cost of capital. This also covers the capital markets involved in the process and decisions for raising funds at the public level for governments, at the corporate level for companies and at the individual level for consumers.

Sound financial discipline benefits both consumers and investors, in turn improving the whole economic system. In broad terms, finance deals with the following sub-fields:
- Capital Markets
- Financial Institutions
- Investments
- Corporate Finance

Objectives Of Financial Management:
Sometimes the objectives of financial management are misunderstood as being about profit maximization. Profit is a vague measure – it can be after tax profit, before tax profit, earnings before interest and tax (EBIT), or earnings after tax (EAT). Profit includes many non-cash items such as depreciation and amortization and bad debt expense. Profit figures can be manipulated. Also, profit is considered as a short term oriented measure of firm performance. For all these limitations of profit measures, profit maximization is not the objective of financial management.

Shareholders’ wealth maximization is the objective of financial management. The concept of shareholders’ wealth maximization takes into consideration the risk factors associated with financial decisions and the time value of money. The shareholders’ wealth maximization is a long term oriented goal. With shareholders’ wealth maximization objective as the key motivation, financial managers have three key decisions to make:
• What sources will be used to raise funds (debt and equity mix) – a capital structure decision
• Where the money will be invested - a capital budgeting decision
• Managing and maintaining an appropriate mix of working capital – a working capital management decision.

Description: This course introduces the fundamentals of corporate finance and conveys managerial and analytical level understanding on financial topics such as capital structure, weighted average costs of capital, capital budgeting techniques, and financial ratio analysis.

This course features dynamic and engaging video with audio narration, infographics and short quizzes to test your knowledge.

Background: Business decisions that involve direct use of money fall within the spectrum of corporate finance. A broader definition of corporate finance also encompasses Business Finance, more applicable to small to medium size enterprises. It involves estimating the capital requirement, raising capital, investing, and monitoring funds towards the economic objectives of the entity.

Estimating Capital Requirement:
This task involves projecting the required funds for running the business (working capital), investments (capital expenditure) and expansion. This estimate needs to be commensurate with the required return on that capital and the firm’s capacity to source funds.

Raising Capital:
There are two main sources of capital for a firm: debt and equity. In debt financing external investors obtain a promise of fixed interest payments with the return of principal. These investors do not however assume any ownership of the business except holding possible security over specific assets. Debt finance may be sourced through a financial institution such as a bank, or from the market by issuing various instruments such as bonds or debentures. Equity investors own the company’s shares and do not expect a guaranteed return. Raising equity is commonly carried out by issuing shares. However, retained earnings can also be used as equity investment – when the firm holds onto internally generated profits for future capital requirements.

Other instruments referred to as hybrid securities may take a form between equity and debt. These securities have certain features that seem like equity and other elements that resemble debt. Warrants, preference shares and convertible bonds are such examples of hybrids.

Investing the Capital:
Company funds will have to be used for both long term assets and working capital requirements in optimal proportions. Working capital is engaged to pay short term liabilities such as direct materials, labour wages and salaries, and overheads such rent, power and fees. Fixed capital is engaged to obtain income producing assets such as land, buildings and equipment.

Monitoring Returns:
A company will continuously monitor its performance to ensure that expected returns on the engaged capital remains on track. Such monitoring is a complex undertaking that uses specialist techniques and reporting.

Description: This course introduces the fundamentals of corporate finance viewed from the perspective of the business manager. Once the course is completed, you will have learned company enterprise valuation method, stock valuation, fundamental and technical analysis, and option valuation. This course features dynamic and engaging video with audio narration, infographics and short quizzes to test your knowledge

Background: The goal of company valuation is to give owners, potential buyers and other interested stakeholders an approximate value of what a company is worth.

Due to the financing of a company by debt and equity, valuation techniques that focus on share deals either value the equity, resulting in the equity value (Eq. V.) or the total liabilities, stating the enterprise value (EV) or firm value (FV). The enterprise value is calculated by the following formula:

Enterprise Value = Market Capitalization +Debt +Preferred Share Capital + Minority Interest - Cash
and cash equivalents

Let’s discuss these components individually and the reasons why they are included in the calculation of enterprise value.

Market Capitalization:
Is the market value of common shares of a company. It is calculated by multiplying the current market price per share by the total number of equity shares of the company.

Debt:
Includes the bonds and bank loans. Items such as trade creditors are not included. Once a business is acquired, its debts become the responsibility of the acquirer. The acquirer will have to repay the debts from the cash flows of the business; therefore, they are added to the calculation of enterprise value.

Preferred Shares:
Redeemable preferred shares are in substance debt. They are debt to all intents and purposes.
Therefore, the existence of such preferred shares represents a claim on the business that must be factored into enterprise value (EV).

Minority Interest:
It is a non-current liability that represents the proportion of subsidiaries owned by minority shareholders.

Cash and Cash Equivalents:
Cash equivalents are investments that can be readily converted to cash. Common examples of cash equivalents include commercial paper, treasury bills, short term government bonds, marketable securities, and money market holdings.

Description: This course deepens your understanding of the fundamentals of corporate finance from the perspective of the business manager. Once the course is completed, you will have learned options valuation and pricing and trading analysis.

This course features dynamic and engaging video with audio narration, infographics and short quizzes to test your knowledge.

Background: Regardless of the reasons for trading options or the strategy employed, it is important to understand the factors that determine the value of an option.

The Black-Scholes Model
Is probably the most widely used and best-known theoretical option-valuation model. A theoretical model is a forward-looking model that attempts to determine what the option should sell for in the market given the option terms and the underlying stock’s salient points.

According to the Options Industry Council, a trade group, three factors generally affect the price of an option under Black-Scholes model:
• The option's intrinsic value.
• The likelihood of a significant change in the stock.
• The cost of money, or interest rates.

Intrinsic Value
The Black-Scholes pricing model considers the current price of a stock and the target price as two critical variables in putting a price on an option.

Likelihood of Significant Change: Time Until the Option Expires

Under the Black-Scholes model, an option with a longer life span is more valuable than an otherwise identical option that expires sooner.

Employee stock options often expire many years down the road, sometimes a decade later.

Using the example mentioned earlier, the option with the $100 exercise price would have greater value, all other variables remaining constant, if the time to expiration was 180 days rather than 30 days. This would allow for a longer period for the price of the underlying stock to increase to a value greater than the $100 exercise price. This relationship is shown in this figure:

Likelihood of Significant Change: Volatility
With the Black-Scholes model, volatility is golden. Consider two companies, Boring Story Inc. and Wild Child Corp., which both happen to trade for $25 a share. Now, consider a $30 call option on these stocks. For these options to become "in the money," the stocks would need to increase by $5 before the option expires. From an investor's perspective, the option on Wild Child - which swings wildly in the market - would naturally be more valuable than the option on Boring Story, which historically has changed very little day to day.

Description: This course applies the fundamentals of corporate finance from the perspective of the business manager. Once the course is completed, you will have learned financial forecasting, co-integration, random walk, seasonality, smoothing and errors and an introduction to survey and research methods.

Background: Financial management in both private and public organizations typically operates under conditions of uncertainty or risk. Probably the most important function of business is forecasting. A forecast is a starting point for planning. The objective of forecasting is to reduce risk in decision making. In business, forecasts are the basis for capacity planning, production and inventory planning, manpower planning, planning for sales and market share, financial planning and budgeting, planning for research and development and top management's strategic planning. Sales forecasts are especially crucial aspects of many financial management activities, including budgets, profit planning, capital expenditure analysis and acquisition and merger analysis.
Forecasts are needed for marketing, production, purchasing, manpower and financial planning. Further, top management needs forecasts for planning and implementing long-term strategic objectives and planning for capital expenditures.
the financial manager must estimate the future cash inflow and outflow.

Forecasts must also be made of money and credit conditions and interest rates so that the cash needs of the firm may be met at the lowest possible cost.
Long-term forecasts are needed for the planning of changes in the company's capital structure.
There are basically two approaches to forecasting: qualitative and quantitative. They are as follows:

1. Quantitative Approach
a) Forecasts based on historical data
b) Associative (Causal) forecasts
c) Forecasts based on consumer behavior - Markov approach
d) Indirect methods

Quantitative models work superbly as long as little or no systematic change in the environment takes place. When patterns or relationships do change, by themselves, the objective models are of little use. It is here where the qualitative approach based on human judgment is indispensable.

2. Qualitative Approach
Forecasts based on judgment and opinion
• Executive opinions
• Delphi technique
• Sales force polling
• Consumer surveys