Department of Finance 1
King Abdulaziz University
Faculty of Economics and Administration Department of Finance
Foundations of Finance (FIN230)
Syllabus, Second Semester-1434/1435 (Spring 2013/2014)
Course Details
Course Title CODE/NO Prerequisites Credits Foundations of
Finance
FIN 230 ACCT 117&213 3 credit hrs
Teaching Team
Team Members
Teaching section
Class Room
Class Time
Office Hours
Phone
&Room
E.mail
Dr. Khadija Harery
Co-ordinator of the course S.T.Th.
9-1 M.W.
11-1
EX:26487 Rm.2224
harery3000
@yahoo.com
Dr. Saima Javaid
VAR 108 (Buld
420)
S.T.Th 12- 12:50
S.T.Th.
9-11 M.W.
11-1
EX:
Rm.2222
dr.saimajavaid
@gmail.com
Dr. Suha Alalawi
DAR 209 (Buld
420)
M.W.
9:30- 11
S.T.Th.
9-12 M.W.
11-12
Rm.2224 suha_alalawi
@hotmail.co.uk
Department of Finance 2 Course Description
The field of finance integrates concepts from economics, accounting, and a number of other business and finance field. This course will introduce finance via conceptual thinking, basic financial analysis, financial calculations and capital markets. It provides also an insight among the students regarding the financial aspects and issues of an organization. It emphasizes how different ratios and different accounting statements help the finance managers in taking logical and rational decision systematically.
Course Objectives
The main objectives of this course are:
1. The main objective of this course is to develop a foundation of financial management concepts.
2. Understanding the Role of financial management within the framework of other internal functional areas.
3. Help future managers to understand how the companies finance works and how to face financial problems.
4. Know Risk - Return Trade off and integrating the Goals and Roles of Financial Managers.
5. Develop investing, financing and real asset management strategies for effective managerial decision –making.
6. Know Ratio Analysis, its importance and application.
7. Perform Financial Forecasting, Financial and Operating leverage and Break-even Analysis in a firm’s strategic growth.
8. Provide the students with the ability to develop and analyze the financial markets and its instruments.
9. Develop the ability to evaluate the investment proposal and a thorough understanding and application of the Capital Budgeting Process and its Techniques.
Course Outcomes
At the end of this course, students should be expected to achieve the following points:
1. Knowledge of the various objectives and functions of financial management.
2. Understand the relationship between Finance, Economics and Accounting.
3. Enable students to understand how corporations make important investment and financing decisions.
4. Understand and explain the Risk and Return Trade off.
5. Relate the previous knowledge of accounting into financial decision-making.
6. Calculation of different types of Ratios and make Financial decisions.
7. Build the student ability to plan ahead and make necessary adjustments before actual event occur in the company by constructing Pro Forma Statements.
8. Calculation and Knowledge of operating and financial leverage and Break-even Analysis.
9. Knowing the concept of Time Value of Money.
10. Knowing the Valuation Concept of the Securities and Bondsand their application.
11. Understand the Idea of the Cost of Capital and how to Calculate it.
12. Comprehend, analyze and apply the Financial Ratios in context of Saudi Arabia and communicate effectively.
Department of Finance 3 Method of Teaching and Learning
1. Class contact hours will include both lecture and discussion.
2. Pre-reading is required for each class and class participation
3. Class participation by using the I Pod, I phone system or note book to connect to the web (Inter active learning).
4. Financial issues and terms are analyzed through case studies, exercises and practical problems.
5. Current examples are used to illustrate learning points.
6. Using specific Financial Site for preparation and searching.
7. Students will be expected to make use of online learning resources and published material.
8. Students are expected to work in groups, co-ordinate their efforts with leadership skills.
Course By-Laws
1. Attendance of classes is very important to grasp the subjects.
2. Respect the time of the lecture.
3. Time of the lecture is valuable as Money.
4. Reading and studying from the book is very important.
5. Do not depend on the Power Point only.
6. Reading and preparing before class will facilitate your understanding.
7. Official emails are important for communication.
8. Calculators are a must to have always especially at the Exam time.
9. No mobiles are allowed to be used as calculators during Exams.
10. Written Calculations are very important at Exams even if it is MCQ.
11. Cheating at the Exams cause
Flunking
the Course.12. No Make- Up Exams except in case of severe illness or death of close family.
13. Mobiles should be Silent at lecture time.
Assessment Methods
1. Emphasis is given on the continuous assessment of students’ over-all performance and enhancement of his/her skills.
2. They are expected to work in groups as a team, their leadership skill will be assessed and their communication abilities are assessed during the whole semester through interaction and classroom discussion.
3. Also, other personality traits will be assessed during the Power-Point Presentation of their group work (Project).
4. Course assessment will take the form of written examination (mid-terms and final), assignments/homework, Power-point presentation and exercises.
5. The distribution of marks are as follow;
A. Exams
a. First Mid -Term (20%) b. Second Mid-Term (20%)
Department of Finance 4 c. Final (30%)
B. Extra-Curricular Activities (Group project: Financial Ratio analysis of Saudi Company and Power-Point Presentation) (15%)
C. Class discussion and participation is very important (10%).
D. Problem Solving (5%)
Text Book
Corporate Finance Foundation, by Hirt, G., Block, G., and Danielsen, B.,n Published by: McGraw-Hill, 14th edition, (2011).
Note: Books are available at Alshaqree Book Store.
Supplementary References
1. Fundamentals of corporate finance by Brealqy, R., Myers,s. and Marcus, A. Published by Mcgraw-Hill, 6th edition (2009).
2. www.tadawul.com.sa 3. www.cma.org.sa 4. www.bfasaudi.com
DETAILED TEACHING AND LEARNING GUIDE
Week Date
Week starting
Activities (Topic)
1 25/3/1435
26/1/2014
Registration
2 2/4/1435
2/2/2014 The Goals and Functions of Financial Management and Review of Accounting
3 9/4/1435
9/2/2014
Financial Analysis
4 16/4/1435
16/2/2014
5 23/4/1435
23/2/2014
Financial Forecasting
6 1/5/1435
2/3/2014
7 8/5/1435
9/3/2014
First Mid-term Exam (Chapters: 1 to 4)
Operating and Financial Leverage
8 15/5/1435
16/3/2014
The Time Value of Money
9 22/5/1435
23/3/2014 Spring Break……
10 29/5/1435
30/3/2014
The Time Value of Money
Department of Finance 5
11 6/6/1435
6/4/2014
Valuation and Rates of Return
12 13/6/1435
13/4/2014
13 20/6/1435
20/4/2014
Second Mid-term Exam (Chapters: 5,9 and 10) Cost of Capital
14 27/6/1435
27/4/2014
15 5/7/1435
4/5/2014 The Capital Budgeting Decision
Students’ Power-Point presentation (Group Project)
16 12/7/1435
11/5/2014 17-19 19/7/-5/8/1435
18/5/-5/6/2014
Final Exam (All Chapters except Chapter 1)
The Event Important Dates
Spring Break 22-28/5/1435 23- 29/3/2014 First Mid-Term (20%) 8/5/1435 9/3/2014 Second Mid-Term (20%) 20/6/1435 20/4/2014 Group Project and Power Point Pt. (15%) 20/7/1435 12/5/2014 Final Exam (40%) 19/7/-5/8/1435 18/5/-5/6/2014
LECTURE TOPICS: AN OVERVIEW
Topics Details
1 The Goals and Functions of Financial Management (Chapter 1)
The major thrust of this chapter is to establish the objectives of financial management and the importance of the financial manager to the organization. Some highlight will be on the importance of owner wealth maximization as a goal and briefly relate it to valuation concepts associated with risk and return.
In addition, the role and functions of the financial markets in allocating capital will be emphasized as well as the pressures of institutional investors on financial managers. Discussion of social responsibility and its relationship to the financial objectives of the firm.
2 Review of Accounting (Chapter 2)
This chapter will prove invaluable in establishing the relationship between accounting and finance.
Department of Finance 6 3 Financial Analysis
(Chapter 3)
Ratio Analysis as an instrument of financial analysis will be covered in this chapter. Though the student must be familiar with the calculation and meaning of each individual ratio, the primary emphasis of this analysis is on the inter-relationship between the ratios to make better decision.
4 Financial Forecasting (Chapter 4)
Financial forecasting is essential to the strategic growth of the firm. The three financial statements for forecasting viz. the pro forma income statement, the cash budget and the pro forma balance sheet are to be discussed.
5 Operating and Financial Leverage
(Chapter5)
The Chapter offers an opportunity to more fully explore the financial effects of all forms of leverage on the firm. The contrast between aggressive and conservative approaches should be emphasized particularly through the useful technique of computing degrees of leverage. This chapter also serves as a good basis for much of the later discussion in the text on the cost of capital. The student begins to appreciate the positive benefits of debt, but also realizes that unlimited use of debt increases the financial risk of the firm and perhaps the cost of various other sources of financing.
The Time Value of Money (Chapter 9)
Understand what is meant by the “Time Value of Money”, and the relationship between present and future value.
Use interest factor table and understand how they provide a shortcut to calculating present and future values. Use interest factor tables to find an unknown interest rate or growth rate when the number of time periods and future and present values are known.
Valuation and Rates of Return
(Chapter 10)
This Chapter offers an opportunity to more fully explore the methods of valuing bonds, preferred stocks, and common stocks. Students should be able to calculate the rates of return of different types of long term securities
Cost of Capital (Chapter 11)
Students should be able to define the overall “Cost of Capital” of the firm, and explain and use the alternative models to
determine the cost of securities.
The Capital Budgeting Decision
(Chapter 12)
Students Should be able to define capital budgeting and identify the steps involved in the capital budgeting process.