Financial Management

Financial Management (hereinafter, the Course) is the course delivered by Vaughn College of Aeronautics and Technology as Vaughn College MGT230 and Shanghai Jian Qiao University as a part of its Aviation Maintenance Management Program in order to cover financial management concepts. Calculus and Principles of Accounting are the prerequisites to the Course.

Description

This Course provides a working knowledge of the tools and analytical techniques used in the theory and practice of corporate finance. The emphasis is on establishing an understanding of the basic elements of financial theory to be use in the application of analytical reasoning to business finance problems. Accordingly, it is geared to students of Management rather than students who intend to follow a career specializing in financial matters.

The Course is taught using a variety of techniques including lecture, text readings, class examples and discussions, case analysis, supplemental article readings, problem simulations.

Course objectives

After successful completion of this Course, students shall be able to:

1. Understand how financial markets and institutions work
2. Exhibit a working knowledge of the analysis of financial statements
3. Understand how interest rates affect the time value of money
4. Understand stocks, bonds and how they are valued
5. Understand the quantitative relationship between risk and rate of return
6. Understand the Capital Budgeting process

Course outcomes

As the Course outcomes, the students shall be able to:

1. Explain how financial markets and institutions work
2. Apply a working knowledge of the analysis of financial statements to a business
3. Calculate the effect of interest rate changes on the time value of money
4. Explain the value of a balanced portfolio comprised of stocks and bonds
5. Explain and demonstrate the quantitative relationship between risk and rate of return
6. Explain and apply the Capital Budgeting process to business problems

Course requirements

1. Individual Assignment. Read and present (i.e., summarize, discuss, critique) an article from a current publication on a management issue. Students are required to make this presentation on the notified date. If you do not present on that date, you will not have a chance to make up this assignment.
2. Group Assignment. This assignment requires work in groups of 4 to 5 members. You will study either a specific company choosing one or more of the topics discussed in class, or choose a topic and do a comparative analysis of two or three companies for that topic. Present your complete project as a group. Presentations should last 15 to 20 minutes and will be followed by questions from your classmates.
3. Examinations. An examination is given for each chapter covered in the text.

Required text

• Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition), ISBN: 978-1-337-39525-0

Suggested materials

• Lectures, tests, videos, and other materials tend to be posted on CNMCyber at https://friendsofcnm.com/

Alternative text

• Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition), ISBN 13: 978-1-4390-7810-5

Required materials

Textbook(s) as noted above, pen and notebook or a computer device running the standard office suite with a document processor, presentation program, spreadsheet editor, and (optionally) colored highlighter pens. No additional materials required unless specified by the instructor or directed by the assignments.

Grading policy

Area	Percentage
Examinations (Midterm and Final)	65%
Group case / discussion / presentation	15%
Class participation, critical review of a financial management article, refreshment quizzes, attendance	20%
Total	100%

Late work policy

If a student turns in an assignment following the scheduled due date, the student will receive minimal feedback and a lower grade. Assignments turned in late will be assessed with a grade penalty. Late work will not be accepted if overdue by more than seven days.

Academic honesty

The College is committed to ensuring quality and integrity in all its academic and evaluative activities. A learning environment that promotes high academic standards is beneficial to students and faculty alike. Academic dishonesty such as cheating and plagiarism is in opposition to the values and mission of the institution and will not be tolerated.

Disability support services

It is the policy and practice of the College to promote inclusive learning environments. If you have a documented disability, you may be eligible for reasonable accommodations in compliance with the College policy, the Americans with Disabilities Act, and/or Section 504 of the Rehabilitation Act. Please note, students should not negotiate accommodations directly with professors; however, professors may assist students in providing information about the self- identification process and the College-based services.

Absences and lateness

Regular attendance is essential for satisfactory academic performance. Institutional policy mandates students missing more than three classes are subject to an overall grade decrease. Students are also advised that additional attendance requirements may be mandated depending on the faculty member and/ or the department from which a particular course is taken. The final grade in any subject may be reduced in proportion to the number of unexcused absences.

Discrimination and harassment

The College does not discriminate on the basis of age, race, color, creed, religion, national origin, citizenship status, gender, sexual orientation, marital status, disability, or status as a military veteran, or for any other category recognized by local, state or federal law. In the programs, activities, and services offered, including but not limited to admissions, recognition of performance, and achievement, which the College provides to students, staff, and applicants, it continually strives to maintain a nondiscriminatory environment.

Course modules

The course schedule established for this semester is a guide. The schedule is subject to change and will vary accordingly. After the 6-module schedule all required material will be covered and reviewed for the final exam.

Module 1. Overview of Financial Management

Sarbanes-Oxley Act, proprietorship, partnership, corporation, S corporation, limited liability company (LLC), limited liability partnership (LLP), intrinsic value, market price, equilibrium, corporate governance, shareholder wealth maximization

Module 2. Financial Markets and Institutions

Spot markets, futures markets, money markets, capital markets, primary markets, secondary markets, private markets, public markets, derivatives, investment bank, commercial bank, financial services corporation, mutual funds, money market funds, physical location exchange, over-the-counter market (OTC market), dealer markets, closely held corporation, publicly owned corporations, initial public offering market (IPO market).

Module 3. Financial Statements and Analysis

Annual report, stockholders' equity, retained earnings, working capital, net working capital, net operating working capital, income statements, operating income, depreciation, amortization, EBITDA, statement of cash flows, statement of stockholders' equity, free cash flow (FCF), net operating profit after taxes (NOPAT), Market Value Added, Economic Value Added (EVA), progressive, marginal tax rate, average tax rate, capital gain, capital loss, traditional IRAs, roth IRAs, alternative minimum tax (AMT), carryback, carryforward, liquid asset, liquidity ratios, current ratio, quick ratio (acid test ratio), asset management ratios, inventory turnover ratio, days sales outstanding ratio (DSO ratio), fixed assets turnover ratio, total assets turnover ratio, debt management ratios, total debt to total capital, times-interest-earned ratio (TIE ratio), profitability ratio, operating margin, profit margin, return on total assets (ROA), return on invested capital (ROIC), basic earning power (BEP), market value ratios, price/earnings ratio (P/E ratio), market/book ratio (M/B ratio), enterprise value/EBITDA ratio (EV/EBITDA ratio), DuPont equation, benchmarking, trend analysis, window-dressing technique.

Module 4. Time Value of Money

Time line, future value, present value (PV), compounding, compound interest, simple interest, opportunity cost, discounting, annuity, ordinary annuity (differed annuity), payment (PMT), cash flow, annual compounding,nominal interest rate (APR), effective annual rate (equivalent annual rate), amortized loan, amortization schedule

Module 5. Interest Rates

Production opportunity, risk, inflation, real risk-free rate of interest, nominal risk-free rate (quoted risk-free rate), inflation premium, interest rate risk, yield curve, nominal yield curve, inverted yield curve (abdominal yield curve), humped yield curve, pure expectations theory, foreign trade deficit

Module 6. Basics of Capital Budgeting

Capital budgeting, strategic business plan, net present value (NPV), independent projects, mutually exclusive projects, internal rate of return (IRR), payback period, discounted payback.

Program-level requirements

Assessment plan

X	Assessment requirements	Reference answers and scoring criteria	Proportion
X1	Attendance, class participation, critical review of related articles, refreshment quizzes	Those activities include: brief essays that (a) compare business types in the United States and China, (b) financial management overview; as well as three small tests conducted in class: (a) Chapter 1-2, (b) Chapter 3-4, (c) Chapter 4-12.	20%
X2	Group case / discussion / presentation	The purpose of those group activities is to compare individual and corporate taxes in the United States and China. This textbook and external source literature review exercise, which refer to literature or network resources mainly for chapters 1-3, but other covered chapters are also touched including students' comments on their viewpoints and learning relevant knowledge of financial management.	15%
X3	Midterm exam	The midterm examination covers chapters 1-3; its grade is taken into consideration mainly as a temporary since the final exam includes all the material that the midterm covers. The midterm grade may also be relevant if any student under-performed on chapters 1-3 during his or her final. If any student missed it, a half of the midterm grade is included as the final exam grade. Both midterm and final include practical data, as well as real-world calculations and analysis.	25%
X4	Final exam	The final exam covers all the chapters including those ones that knowledge is previously assessed in X3. Both midterm and final exams include practical data, as well as real-world calculations and analysis. All the tests examined the main contents of the textbook and met the curriculum requirements of the syllabus.	40%
	Total		100%

Note: The order of X is consistent with the syllabus.

Assessment requirements

In-class examination will be given according to the correct rate of examination paper.

• Quiz 1 -- Textbook Chapters 1-3
• Midterm Exam -- Textbook Chapters 1-3
• Quiz 2 -- Textbook Chapter 3-4
• Quiz 3 -- Textbook Chapters 3-12
• Final Exam -- Textbook Chapters 1-12

Calculus prerequisite

This first calculus course will begin with the study of limits and continuity. It will continue with a study of techniques to differentiate algebraic, transcendental and rational functions. Applications of differentiation will be included. The course will end with an introduction to integration.