George Washington University
FINA 4001 — Fall 2014
Advanced Financial Management
http://savickas.net/4001/
Section #: 10
CRN: 80201
Class time: Tuesday and Thursday
15:45–17:00
Class room: Duques 207
Professor:
Office:
Office hours:
Phone:
E-mail:
Robert Savickas, Ph.D.
Funger 501R
Thurs., 17:00–19:00
994–8936
savickas@gwu.edu
Description: Analysis and readings covering applications of theory to financial management. Case
studies for decision making involving working capital, capital budgeting, financing, dividend policy, and valuation. The course will involve both case analysis and lectures.
Texts: Required: W. Carl Kester, Richard S. Ruback, and Peter Tufano, Case Problems in
Finance, McGraw–Hill. Not required, but highly recommended: Higgins, Robert C.,
Analysis for Financial Management, McGraw–Hill.
Background Familiarity with basic and intermediate finance and accounting is necessary. While most
Requirements: students in this course are likely to have taken previous finance classes, not all may have
taken ACCY 3106 on Financial Statement Analysis, which important for Fina 4001. If
a student has not taken ACCY3106 or its equivalent, he/she is strongly encouraged to
consider one of the two options: either (1) take ACCY 3106 concurrently with Fina 4001,
or (2) drop Fina 4001 until ACCY 3106 is taken. Those two options are much preferable
to having to struggle through Fina 4001 without the necessary prior knowledge.
Grading: Three case reports: 6% each; one group case presentation: 6%; midterm exam: 38%;
final exam: 38%.
Exams: Both the midterm and the final exams will include questions about cases covered in
class. The purpose is to assess to what extent students followed the cases. To do well
on the exams, students will have to read and analyze each case covered in the class.
Questions: Feel free to ask questions during the lectures, office hours, by e–mail, my office phone,
or any time you see me.
Calculators: Please write your name on any of your calculators, cell phones, laptops, etc. that you
take to the class. Should you forget one in the classroom, I will be able to return it to
you if it has your name. Unnamed equipment will be left in the classroom.
Participation: Students should be prepared to actively participate in the case discussions, including
the cases for which they did not prepare a report. If the class participation is weak, the
instructor reserves the right to change the structure of grading, including making reports
mandatory for each case. Additionally, students will have the opportunity to volunteer
to solve a problem at the black–board or otherwise participate during a lecture. Each
successful invited participation will earn the participating student 0.5% (half–point)
towards his/her final grade. This is especially important for students whose course grade
is on the borderline between two grades. Each such opportunity to earn participation
points will be clearly announced in the class.
Case reports: There are a total of 15 cases for which case reports are due. Each student has to write
three case reports. The reports will be graded based on the depth and reasonableness of
the analysis conducted. Because these reports involve a considerable amount of effort,
doing more than four is not feasible. Each student is free to choose which four cases,
out of all 15, he or she wants to submit. However, you may not choose to submit a case
report for the case which you are presenting because a presentation is a group effort,
but case reports are not. Each case report should address the following questions: (1)
What (if any) are the problems confronting the company? (2) How did the problems
arise? (3) Does the management adequately understand the problems and their causes?
(4) What (if any) solutions to the problems is the management considering? (5) How
good are those solutions? (6) What would you do? (7) Why would you do that? Only
the content matters, not the number of pages. So, students do not need to adjust the
font size, margins, spacing, etc. to fill the pages. Students should say all they have to
say, not more, not less. If they can say everything on one page – great. If they need
two or five or 10 pages, fine. All reports should be typed. All reports are due at the
beginning of the class in which the corresponding case is discussed.
Presentations: Fact: business professionals should be accustomed to presenting in front of (sometimes
not so friendly) audience. B–School is a good place to learn this. Therefore, students will
be required to present cases in this class. Students will form groups of to present cases.
Each group will present one case. The presentations should address same seven questions
as the case reports. Student creativity is encouraged. The transparency projector and
PowerPoint will be available. If students plan to use some other media (e.g., VCR,
satellite TV, live interviews, guest speakers, field trips, music, lighting effects, etc.)
they should confirm with the instructor the relevance of such media in advance. During
presentations, the class may ask questions and challenge the presenters. To facilitate the
discussion, points will be awarded as follows. If a presenting group is unable to answer
a reasonable question from the class properly, it will lose a point from its presentation.
The point will go towards the presentation of the group that asked the question. So,
prepare your presentations well. Imagine that you are a management team trying to
defend your decisions in front of a rather critical Board of Directors. Therefore, do
what you got to do to do well. All presentations will take place on days for which the
corresponding case is scheduled to be discussed.
Choose cases: To choose cases for presentation, students should go to the class website and follow the
appropriate link. The automated system will display available cases. Students can click
on the cases they want to present, type in their names, and those cases will be reserved
for them. First come = first serve. The first choosers get the widest choice. The last
choosers, unfortunately, get no choice. As a first–mover encouragement, the team who
picks the first case to be presented (Butler Lumber) will get an extra half–point (i.e.,
0.5%) towards their final grade.
Form teams: Students should form their case-presentation teams on the class website. That will help
us keep track of the teams. First, one member of the team needs to reserve the desired
cases, as described in the “Choose Cases” section of this syllabus. Other team members
can join the chosen presentation teams. Feel free to form teams with your friends. Or,
you can join students whom you don’t know but who present on the dates that are
convenient for you. All of that is done online, on the class website.
Web page: It will be students’ responsibility to check the class web page regularly (at least three
times a week) using the URL (web address) given at the top of this syllabus. Important
and time–sensitive information, announcements, dates, and hints will be posted there.
Do not wait until the next class period to hear the news, as it may be old by that time.
Note: this website is maintained by the instructor and is not in any way associated with
the Prometheus or Blackboard, so please do not look for it there.
E–mailing list: Students will be signed up for the mailing list for the class. This will allow the instructor
to efficiently broadcast an important message to the entire class, answer a common
question, and it will allow students to post any information/question that they want
the rest of us to know/answer. Please let Savickas know if you are not receiving these
communications.
Attendance: Formal attendance will not be taken. Unfortunately, sometimes instructors can’t help
but notice some new faces, or some persistently missing ones. Furthermore, when enough
students are missing, instructors often feel a great temptation to present some additional
interesting material which then somehow ends up on an exam. . .
Academic The instructor retains the right to perform a random ID check, assign or reassign seats
honesty: before and/or during the test or quiz, and to confiscate any cheating materials and
devices, including cell phones and PDAs. It is hoped that such measures will not be
necessary since this is a class of future business professionals. Given that the financial
crisis of the early XXI century resulted in large part from ethical compromises, it is
hoped that GWU will graduate honest and responsible business professionals. Students
can expect that their case reports will be checked for plagiarism using a variety of
resources, including those available at GWU as well as on the Internet.
Consent: A student’s staying in this class (as opposed to dropping it) indicates his/her understanding of and willingness to comply with all the terms listed in this syllabus.
Schedule: In the table below, the chapters are from the book by Higgins. TBA = “to be announced.”
Aug. 26:
Aug. 28:
Sep. 2:
Sep. 4:
Sep. 9:
Sep. 11:
Sep. 16:
Sep. 18:
Sep. 23:
Sep. 25:
Sep. 30:
Oct. 2:
Oct. 7:
Oct. 9:
Oct. 14:
Oct. 16:
Oct. 21:
Oct. 23:
Oct. 28:
Oct. 30:
Nov. 4:
Nov. 6:
Nov. 11:
Introduction, Assessing Financial Health. Ch. 1, 2.
Assessing Financial Health. Ch. 1, 2.
Planning Financial Future. Ch. 3, 4.
Planning Financial Future. Ch. 3, 4.
Tire City case.
*Butler Lumber case due.
Butler Lumber case continued.
*Toy World case due.
Savickas out of town; no class.
*SureCut case due.
*Hampton Machine Tool case due.
Financing/Capital Structure. Ch. 5, 6.
*DuPont case due.
*American Home Products case due.
*Continental Carriers case due.
*Hospital Corporation case due.
Midterm Exam.
*FPL Group case due.
Derivatives Lecture. Ch. 5 Appendix.
Derivatives Lecture. Ch. 5 Appendix.
*Tiffany & Co. case due.
*MCI case due.
*Compañia de Teléfonos de Chile case due. Valuation and Discounted Cash
Flows. Ch. 7.
Nov. 13: Valuation and Discounted Cash Flows. Ch. 7.
Nov. 18: *The Super Project case due. Valuation and Discounted Cash Flows. Ch. 7.
Nov. 20: Cost of Capital. Ch. 8.
Nov. 25: *Marriott case due.
Dec. 2: *American Chemical case due.
Dec. 4: Make-up class. Review.
TBA: Final Exam
*Case to be presented on this date.