BA 303 – Business Finance
Portland State University
School of Business Administration
Fall 2015
Professor: Michael Dimond
Email: mcdimond@pdx.edu
Phone: (503) 725-8182
Office Hours: TBA
Office: SBA 435
Faculty Website: http://www.pdx.edu/sba/fp-michael-dimond
LinkedIn: http://www.linkedin.com/in/michaeldimond
Facebook: http://www.facebook.com/ProfDimond
Twitter: http://twitter.com/ProfDimond
COURSE DESCRIPTION
This course covers the core issues facing corporate financial managers and the professional service
providers in the finance industry. Topics include understanding, interpreting and forecasting
financial statements; seeing the trade off between risk and return; using time value of money
concepts to understand the net present value of financial decisions; and, learning tools needed to
make effective long term financial decisions for budgeting capital, investing and borrowing.
PREREQUISITES
1. BA 211 (Fundamentals of Financial Accounting); 2. Junior Standing. This business course is
reserved during priority registration to students admitted to the School of Business. This course
requires students to be proficient in Microsoft Excel. Students will not be added unless they are on
the official wait list for the course.
TIME COMMITMENT
University courses require time and effort. The general guideline is for every credit hour you should
spend 2-3 additional hours working on the coursework. This is not an easy course, so it tends
towards 3 extra hours per credit. This means you should expect to spend 4 hours a week involved in
class interactions PLUS another 12 hours studying, practicing and improving your skills. This course
may be a commitment of 16-hour per week or more.
RESOURCES
Text:
Principles of Managerial Finance customized for PSU’s BA 303 Business Finance by Gitman &
Zutter, 13th edition. Students need to make sure that they obtain access code for the online
content in MyFinanceLab when purchasing the text (available at PSU Bookstore).
You may also find your accounting textbook helpful...
MyFinanceLab:
You must register at http://pearsonmylabandmastering.com. The cost for this is included with a
textbook purchased at the university bookstore. If you buy a used text, you will probably have to
purchase access separately. You can register for a free limited-time access, so there is no reason to
delay your registration. Once you have the access code, you enter it and your account converts to the
full-term version.
Calculator:
This course requires a financial calculator. I recommend the Texas Instruments TI84 Plus. See my
website for my opinions of calculators and for a cheatsheet called “How do I use this financial
calculator?” http://www.profdimond.org/calculators
Other Resources:
Homework Help: Bookmatch problems are available for all chapter problems through
http://pearsonmylabandmastering.com These match the problems with the same figures shown in the
textbook.
Excel skill-builders are available through my website at http://www.profdimond.org/excel
Links to useful online information can be found on my website at http://www.profdimond.org/links
APPROACH
Modules:
This course is formed into modules. A single module will cover material contained in one or more
chapters in the textbook, as well as supplementary material from the instructor. You should proceed
through each module in four stages:
1. Prepare
Read the indicated sections of the text
Work the example computations and self-test problems shown in the text
Answer warm up exercises (http://pearsonmylabandmastering.com)
2. Interact
Content (slides & lecture)
Discussion
Homework Help
3. Practice
Online problems (http://pearsonmylabandmastering.com)
4. Improve
Study Plan (http://pearsonmylabandmastering.com)
Adjust the notes you will use on exams
Online Homework & Quizzes:
Homework problems & quizzes are worked online using Pearson’s MyFinanceLab. Access to this
system is purchased with the textbook at the PSU bookstore, but (if you have a used book, for
example) you can also purchase access to this content on the MyFinanceLab website. To register, go
to the MyFinanceLab website (http://pearsonmylabandmastering.com) and use the access code to
register for the course. You can register for a free limited-time access, so there is no reason to delay
your registration. Once you have the access code, you enter it and your account converts to the fullterm version.
Notes on Exams:
Samuel Johnson once said, "The next best thing to knowing something is knowing where to find it."
Organizing your information into notes will help you find that information quickly and easily when
taking a test. I recommend you build a draft of your notes before doing the assigned problems, then
adjust the notes afterward.
I allow 1 sheet of notes, both sides, on in-class exams. In addition, you may use the “How do I use
this financial calculator” sheet available on my website.
Exams will cover the chapters, lectures, problems, questions and other material which precede the
exam. Students are responsible to be familiar with all material in the course.
GRADING PROCEDURE
10% Online Problems
30% Exam #1
30% Exam #2
30% Exam #3
Grading Scale: 100-90=A, 89-80=B, 79-70=C, 69-60=D, Below 60=F
COURSE POLICIES
1. Late work is not accepted.
2. Personal digital assistants mobile phones, mini-computer or other communications devices
are not allowed for exams. Financial calculators are allowed and recommended
3. Failing to demonstrate honesty and integrity will result in a grade of ZERO.
4. Students are held responsible for all announcements regarding class.
PROPOSED SCHEDULE
This is the proposed schedule and will be adjusted as needed. Students are held responsible for all
announcements regarding class.
Weeks 1-3:
Module A
Fundamentals
Module B
Time Value of Money
Exam #1
Weeks 3-6:
Module C
Bonds & Stock
Module D
Costs of Capital
Module E
Using TVM to Make Business Decisions
Exam #2
Weeks 6-10:
Module F
Cash Flows & Valuation
Module G
Financial Statement Analysis
Module H
Forecasting for Financial Management
Final Exam http://www.pdx.edu/registration/final-exams-schedule
READINGS (per module)
These are the sections of the text to review for each module. There may be material in the slides and
other supplementary sources provided by the instructor. Notice that the material is not necessarily
covered in the same order as the book.
Module A
Fundamentals
1.1 What is business
1.2 Goal of the firm
1.3 Managerial finance function
1.4 Governance and agency
2.1 Financial institutions and markets
2.2 The financial crisis
2.3 Regulation of financial institutions
2.4 Business taxes
3.1 The stockholders' report
(NOTE: The rest of chapter 3 is covered later in the course)
4.1 Analyzing the firm's cash flow
4.2 The financial planning process
8.1 Risk and return fundamentals
8.2 Risk of a single asset
8.3 Risk of a single portfolio
Module B
TVM
5.1 The role of time value in finance
5.2 Single amounts
5.3 Annuities
(NOTE: 5.4 is covered later in the course)
5.5 Compounding interest more frequently than annually
5.6 Special applications: Amortization, determining deposits needed
Module C
Bonds & Stock
6.1 Interest rates and required returns
6.2 Corporate bonds
6.3 Valuation fundamentals
6.4 Bond valuation
7.1 Differences between debt and equity
7.2 Common and preferred stock
7.3 Common stock valuation
7.4 Decision making and common stock value
Module D
Costs of Capital
9.1 Overview of the cost of capital
9.2 Cost of long-term debt
9.3 Cost of preferred equity
9.4 Cost of common equity, retained earnings vs new issue
8.4 CAPM
9.5 WACC
Module E
Using TVM to Make Business Decisions
10.1 Overview of capital budgeting
10.2 Payback period
5.4 Mixed streams
10.3 NPV, PI & EVA
10.4 IRR
10.5 Comparing NPV & IRR
Module F
Cash Flows & Valuation
4.1 Revisited: Analyzing the firm's cash flow
4.2 Revisited: The financial planning process
11.1 Relevant cash flows
11.2 Finding the initial investment
Module G
Module H
11.3 Finding the operating cash inflows
11.4 Finding the terminal cash flow
11.5 Summarizing the relevant cash flows
Financial Statement Analysis
3.2 Using financial ratios
3.3 Liquidity ratios
3.4 Activity ratios
3.5 Debt ratios
3.6 Profitability ratios
3.7 Market ratios
3.8 A complete ratio analysis
Forecasting for Financial Management
4.1 Revisited: Analyzing the firm's cash flow
4.2 Revisited: The financial planning process
4.3 Cash planning & cash budgets
4.4 Profit planning: pro forma income statement
4.5 Preparing the pro forma income statement
4.6 Preparing the pro forma balance sheet
4.7 Evaluation of pro forma financial statements