Financial Management
FN 7100
Winter/Spring Term 2006
Instructor:
Place & Time:
Office:
Office hours:
Telephone:
E-mail:
Fax:
Thomas L. Lyon, Ph.D.
Conway 204, F/S 8:00 – 10:30
Conway 321
F/S 10:45 – 11:30 a.m.
Or call for an appointment
(816) 501-4092
Thomas.lyon@rockhurst.edu
(816) 501-4650
Text(s)
Analysis for Financial Management, Robert C. Higgins, McGraw Hill/Irwin Publishing, 8th edition.
Profit and Cash Simulation, Schuster-Kane Alliance.
Other Handout materials: Case, Articles, and Financial Analysis Spreadsheet.
Annual Reports for your organization and that of a key competitor.
Course Description
FN 7100 Financial Management – Course enables student to complete an accounting and finance
project by assessing his or her own organization. Students also practice accounting and financial
decision-making at a senior-management level, using a financial simulation, and cover the theories and
tools, and develop the skills necessary to understand finance from a senior management/leadership
perspective. The project and simulation will allow the student to practice and learn about all the finance
functions including treasury and cash management, capital budgets, pro forma financial statements,
capital structure, working capital and growth issues.
Learning Goals
Using an executive management context for learning, the student should be able to:
1. Read, analyze and interpret financial statements and related material from annual reports, 10K,
and internal company data and be able to make judgments about the financial health of a
business organization.
2. Create proforma statements - income statement, balance sheet and cash flow and understand how
decisions impact the various statements.
3. Value a business, a capital asset, and a financial asset.
4. Analyze financial and capital structures and determine cost of capital, risk, dividend policy and
financing option.
5. Identify the financial instruments corporations use and the markets they trade in.
6. Identify trends and obtain tools for managing working capital-current assets and current
liabilities.
7. Utilize PC technology and software and on line data bases and search sources.
8. Recognize and formulate senior management and board level financial issues.
1
Course Requirements
1. Class and team attendance and participation.
2. Team learning through a financial simulation and an understanding of how your decisions influence
the statements and the business.
3. Overview reading of text chapters prior to class.
4. Completion of the accounting and financial project using your company or an agreed-upon substitute
(see attached format and expectations).
Evaluation
You will be evaluated on the following:
1. Two exams worth 40% of your grade. Individual assessment.
2. A team portfolio worth 10% of your grade. Team-based assessment.
3. The completion of the financial project on your organization worth 40% of your grade. Individual
assessment.
4. Classroom attendance and participation, team attendance, and participation and my assessment of
your effort and learning, worth 10% of your grade. Individual assessment.
Policies
Attendance and Participation are part of an effective adult-learning process. You are expected to inform
me and your teammates of anticipated absences and to ask team help in gathering notes, handouts, and
other information missed in class. I recognize you all have extremely busy schedules with work, family
and school, so if there is a conflict on the exam date or a major project, you should contract me on the
revised time or date.
Topical Outline
All class dates are listed and major activities like the exam, portfolio and audit are included. We will
update the schedule as the semester proceeds, to match the learning pace of the class.
We will cover, in order, Chapters 1, 2, 3, 4, 6, 7, 8, 9, and 5 of the Higgins text.
2
FN 7100 Financial Management
Assignment Sheet
Winter/Spring Term 2006
Date
Topic
Assignment Due same day as class date
Jan. 6
F
1
Higgins text Ch.1 Financial
Review Ch.1 of the Higgins text on financial
Statements; Balanced Scorecard.
statements and the Balanced Score Card
Tocco/Lyon transition. Tocco hosts information I emailed you.
Jan. 14
S
2
Corporate Citizenship special topic Gary DeRigne will email any assignment to you
the week before this class.
Gary DeRigne: guest faculty
facilitator
Jan. 20
F
3
Jan. 28
S
4
Chapter 2 review and chapter3;
Profit and Cash Game
Feb. 3
F 5
Chapter 2 review and chapter3
Feb. 11
S
Chapter 3 review and chapter 4
Feb. 17
F 7
Chapter 6 and 7 intro
Balanced Scorecard paper due
Feb. 25
S
8
Chapter 6 and 7 intro
Exam 1; one hour
March 3 S
9
Chapter 7 Capital Budgeting
6
Ratio analysis, project discussion,
data sources. Chapter 2
March 18 F 10
Chapter7 and 5- Financial marketsDividend policy
March 24 F 11
Chapter7 and 5 Financial marketsDividend policy
April 1 S 12
Chapter 8 Cost of Capital
April 7 S 13
Chapter 8 and 9 Valuation
April 22 F 14
Chapter 9 Valuation
April 28 S 15
Closing focus and review
Chapter
and
2.
Weekly assignments will be updated by email,
Major assignments are listed below.
Chapter 3 Overview read, review chapter 2
information and notes.
Financial Analysis paper due
Exam 2 one hour; *Team Portfolio due
3
FN 7100
Financial Management
Portfolio Format
Each team in FN 7100, Financial Management, will keep a portfolio (manila folder) of materials you
generate during the semester. 10 % of your grade.
Materials to be included:
1)
A copy of the teams Profit and Cash game financial statements with a write up of the
process used to create them and the learning insights for the team.
2)
The conceptual tracing of how the following decision/actions impact the Income
Statement, Balance Sheet, Cash Budget, and Return on Investment (profit/total assets):
(a) make a sale, (b) collect on a sale; (c) buy a fixed asset; (d) acquire debt; (e) add two
batches of inventory; draw and expense card but not have to pay yet. Trace how each
decision/action impacts each statement and ROI.
3)
WSJ Articles your team select and reads on current events with finance implications.
Please identify and write a paragraph on a financial issue the article addresses.
4)
Homework assignments
5)
A frame of reference paper, 2-3 pages, discussing the teams most important take aways
from the course and feedback on:
a. What do you perceive as the strengths and weaknesses of Profit and Cash as a
learning process (practice field)?
b. What do you perceive as the strengths and weaknesses of the accounting/finances
projects?
c. What would you change to enhance the learning process in the course to enhance the
learning process?
4
Executive Fellows Accounting and Finance
Continuation Project
Purpose: Create a hands-on opportunity to apply accounting and financial knowledge and skills to your
organization and industry.
Obtain an annual report for your organization (or a substitute, if public information is unavailable) and
that of a key competitor. You can obtain annual reports from PRARS on the Internet or by going to MSN
Money and getting 5 years of financial statements.
1. From knowledge of your organization, describe the quantitative and qualitative metrics your
organization uses to measure success, and guide and reward employees (2-3 pages). Use Robert
Kaplan's “Balanced Scorecard” as an organizing model for your discussion. Comment on the
effectiveness of these metrics and what you would change to improve them.
Using 5 years of financial information from your company, and at least one year of data for your key
competitor, look at trends and benchmark against that competitor. In an executive summary (3-5
pages) discuss and justify your findings on the financial health of your organization using information
you have learned from your ratio analysis. You may use existing ratios from your company if it is public
that can be found at the Morningside web site.
http://quicktake.morningstar.com/Stock/Profitability10.asp?Country=USA&Symbol=MRK&stoc
ktab=keyratio&pgid=qtqnnavkeyrat .
2. Consider the following senior issues in your firm and write up short descriptions of and
recommendations for:

Your organizations financial structure and viability given present economic conditions. Include
financial rating from outside agencies like Standard and Poor’s or Moodys as part of this
discussion. Categorize your firm as aggressive, conservative or middle-of-the-road in terms of use
of Leverage and the use of Short term versus Long term Debt. How do outsiders perceive you?

On the financing side of your company:
a.
Does your firm have a dividend policy? Does it make sense in terms of your strategy?
b.
What is your estimated Weighted Average Cost of Capital?
c.
What has happened to your Common Stock Price (or Value), Earnings Per Share, and market to
Book Value over time? What is this saying about your firm? If Private or non-profit assess how
your “stakeholders” perceive your success.
5
FN 7100 Financial Management – Executive Fellows only. Course enables student to complete an
accounting and finance project by assessing his or her own organization. Students also practice accounting and
financial decision-making at a senior-management level, using a financial simulation, and cover the theories and
tools, and devel the skills necessary to understand finance from a senior management/leadership perspective. The
project and simulation will allow the student to practice and learn about all the finance functions including treasury
and cash mgnt, capital budgets, pro forma financial statements, capital structure, working capital and growth issues.
Using an executive management context for learning, the student should be able to:
XF Program
Learning Goal[s]
1,2,3,5,6
1
Read, analyze and interpret financial statements and related material from annual
reports, 10K, and internal company data and be able to make judgments about the
financial health of a business organization. [Level 4: Analysis]
2
Create pro-forma statements - income statement, balance sheet and cash flow and
understand how decisions impact the various statements. [Level 5: Synthesis]
3
Value a business, a capital asset, and a financial asset. [Level 3: Application]
3,5
4
Analyze financial and capital structures and determine cost of capital, risk, dividend
policy and financing option. [Level 4: Analysis]
3,5
5
Identify the financial instruments organizations use and the markets they trade in.
[Level 1: Knowledge]
6
Identify trends and obtain tools for managing working capital-current assets and current
liabilities. [Level 4: Analysis]
3,5
7
Utilize PC technology and software and on line databases and search sources.
[Level 3: Application]
3,5
8
Recognize and formulate senior management and board-level financial issues.
[Level 5: Synthesis]
1,2,6
1,3,5,6
2,3,5
6