SOUTHERN CONNECTICUT STATE UNIVERSITY
DEPARTMENT OF ECONOMICS AND FINANCE
FALL 2002
COURSE NUMBER:
MBA 503
COURSE TITLE:
Managerial Finance
COURSE DESCRIPTION:
This course addresses the financial management issues of an economic agent within the context of a free-market capitalistic economy, using a manufacturing corporation operating in a “domestic” as well as international market as a basic model.
At the end of the course, the student will have and understanding of the issues involved and their general solution, with the objective of maximizing the wealth of the firm’s owners through maximizing common stock prices.
PREREQUISITES:
None stated. However, successful completion of the course is virtually impossible without first completing MBA 502 and 506.
PROFESSOR:

Dr. Robert M. Eldridge.
Tel: (203) 876-5046 (H); (203) 392-5628 (O)
Fax: (203) 392-5254
Email: eldridger1@southernct.edu

OFFICE HOURS:
Tues: 1700-1915; Wed: 1600-1800; Thurs: 1000-1200; or by appointment.
CLASS HOURS:
Tues 1935-2205, EN247
MATERIALS:
  1. Financial Management, Theory and Practice, 10e, Brigham and Ehrhardt, Southwestern Press, 2002
  2. Subscription to the Wall St Journal.
COURSE OBJECTIVES:
The objective of this course is to establish a foundation in the financial management of the publicly-traded, for-profit firm in the context of a free-market capitalist system. The course will cover, inter alia, basic analytics, treasury management, capital budgeting, capital structure, cost of capital, security pricing, and dividend policy. At the end of the course the student should have an understanding of the major issues facing the
corporate financial manager.
METHOD OF INSTRUCTION:
The course will consist of lectures, readings from the Wall St Journal, usage of the World-Wide-Web and a term paper.
METHOD OF ASSESSMENT:
1. Exams: (2@ 25 %) = 50%
2. Term Paper = 30%
3. "Two minute drills" = 15%
4. Participation and attendance = 5%
SPECIAL NOTES:
  1. “Two minute drills”. At the end of each class there will be a one question quiz lasting two minutes. I will count only the top 10 grades. This will constitute 15% of the course grade.
  2. At the end of the course the student will be requested to complete a “Course Survey” form, separate and distinct from any University Evaluation form. This survey helps me in preparing the course for the next time it is offered. For each form returned, 1/n points will be added to the final grade, where “n” represents the number of students enrolled in the course based on the registrar’s final class list.
  3. The student is permitted and encouraged to tape record lectures for personal study use only.
  4. If any student has a particular disability-related need in order to participate in this course, such as special seating, note-taking assistance, use of tape recorders or modified exam conditions you will need to visit the Disability Resource Office, EN15, to arrange for approved accommodations. If you have other information you wish to share with me such as emergency medical information, or arrangements in case the building has to be evacuated, please tell me as soon as possible.
  5. Weather Check number: 203-392-5520.
  6. Following the finishing of the draft of this book, the title was sold to Southwestern Press and printed under its imprint. As a result, there are a large number of web site references that refer to HarcourtBrace, the previous publisher that were changed by Southwestern on the web, but not in the book. Therefore, whenever you see a reference to www.harcourtcollege.com, it should be changed to www.swcollege.com.
  7. It is recommended that you form yourselves into study groups for the purpose of doing the homework problems.
  8. Cell phones and audible pagers MUST BE TURNED OFF during class unless the permission of the instructor has been obtained in advance.

    Failure to comply will result in a failing grade for the class.

TERM PAPER:

You are to select a publicly-traded (NYSE or AMEX) manufacturing firm and do a five year analysis of it, using its publicly available financial statements using a SAS program to be provided. The Analysis will cover the years 1997-2001 inclusive. Based on your analysis of the various results, you will answer the following question:

If you had all the money in the world, would you buy this company; if so, why so; if not, why not?

The length of the paper is not important. Please attach a copy of the 2001 annual report as an appendix to the paper.

The grade on the paper will be a function of both the finance and the writing. While I don’t expect Pulitzer-prize English, I do expect the following:

  1. No spelling errors
  2. Standard grammar:
    1. Every sentence must have a subject and a verb.
    2. Subject and verb will agree in number.
    3. No split infinitives.
    4. No dangling participles
    5. No dangling prepositions.
  3. Proper punctuation
  4. Pronouns will clearly reflect to a preceding proper noun.
  5. Remember, a name like General Motors is a compound singular noun and thus is never referred to as “they”, but always “it”.
EXPECTATIONS:
  1. What you may expect from me:
    1. A strong grounding in Corporate Finance
    2. A willingness to work with you on specific problems you have with the course or scheduling.
    3. A sense of excitement about the field of finance.
  2. What I expect of you:
    1. Come to class prepared by having read the assigned materials and done any outside work assigned.
    2. If you know that you will miss a class, a call to me would be appreciated.
    3. If something does not make sense in the course, you will ask me either in class, in office hours or call me at home.
    4. A sense of what is going on in the world of business and finance through a daily reading of the Wall St Journal, sections one and three at a minimum.
  3. Profile for success or failure. If you go into an exam behind in the reading and not up with the class discussions or any assigned homework, you probably will not be successful. If, on the other hand, you have done the reading and homework and been faithful in attendance, you should have no problem with any exam you get from me.
MBA 503 ASSIGNMENT SCHEDULE
Date
Topic
Chapters
Problems
Remarks
Sept 03
  1. Introduction
  2. Accounting Review
  3. Statistics Review
  4. Financial Statements
1, 2, 3

2-1, 2-2, 2-3, 2-5, 2-10, 2-12, 2-13, 2-15, 2-20

3-1, 3-2, 3-3, 3-4, 3-5, 3-6, 3-7, 3-8, 3-9, 3-10, 3-11, 3-13, 3-15, 3-17

 
Sept 07 Special Class      
Sept 10
  1. Financial Statement Analysis
  2. Forecasting
  3. Risk and Return I
4, 6

4-1, 4-2, 4-4, 4-5, 4-6, 4-8, 4-9, 4-11, 4-12, 6-1

6-2, 6-3, 6-6, 6-17, 6-18

 
Sept 17
  1. Risk and Return II
  2. Interest Rates
  3. Time Value of Money I

 

6, 5, 8

5-1, 5-2, 5-3, 5-10, 5-12, 5-15, 5-16

8-1, 8-2, 8-3, 8-4, 8-5, 8-6, 8-7 ,8-8, 8-9, 8-10, 8-11, 8-12, 8-13, 8-14, 8-16, 8-20, 8-30, 8-31

 
Sept 24
  1. Time Value of Money II
  2. Treasury Management I
8, 22, 23

22-1, 22-2, 22-3, 22-4, 22-5, 22-6, 22-7, 22-8, 22-10,22-12, 22-13

23-1, 23-3, 23-4,2 3-6, 23-10, 23-12, 23-13, 23-14, 23-16, 23-17, 23-18, 23-20

 
Oct 01
  1. Treasury Management II
22,23    
Oct 08
  1. Capital Budgeting I
  2. Mid Term Exam
13,14    
Oct 22
  1. Capital Structure
16, 17

16-1, 16-2, 16-3, 16-7, 16-8, 16-9, 16-11

17-1, 17-6

 
Oct 29
  1. Cost of Capital
11 11-1, 11-2, 11-4, 11-10, 11-11, 11-12, 11-13, 11-14, 11-16, 11-17, 11-18, 11-19  
Nov 05
  1. Asset Pricing
  2. Stock Valuation
10 10-1, 10-3, 10-4, 10-5, 10-6, 10-7, 10-8, 10-9, 10-10, 10-19, 10-20, 10-22, 10-24  
Nov 12
  1. Dividend Policy
  2. Valuation/Value-Based Management
18, 12

18-1, 18-2, 18-3, 18-4, 18-5, 18-6, 18-10, 18-11, 18-12

12-1, 12-3, 12-4, 12-5, 12-6, 12-8, 12-9, 12-10, 12-11, 12-12

 
Nov 19
  1. Leasing
20 20-1,20-3,20-6,20-7  
Nov 26
  1. Initial Public Offerings
19 19-1, 19-2, 19-4, 19-6, 19-7  
Dec 03
  1. Derivatives
  2. Bankruptcy
24, 25

24-1, 24-2, 24-3, 24-4

25-1, 25-2

Term Paper Due
Dec 10
  1. Final Exam