bus1 170 / fundamentals of finance

BUS 170 Sections 2 and 4, spring 2016 of 16 Revised in February 2016

San José State University

College of Business/Department of Accounting & Finance

BUS1 170, Fundamentals of Finance, Sections 2 and 4, Spring 2016

Course and Contact Information

Instructor: Laura Roden

Office Location: BT 858 (new location)

Telephone: (415) 269-0101

Email: [email protected]

Office Hours: MW 8:00-8:45am DROP-IN

MW 12:00-2:45pm BY APPOINTMENT

Class Days/Time: Section 2 MW from 9:00-10:15am

Section 4 MW from 10:30-11:45am

Classroom: BBC 108

Prerequisites: BUS 21 or BUS 122A, ECON 1A, ECON 1B and BUS 90

Course Format

This course will utilize a standard classroom lecture and textbook format. Lectures will typically be supported by

powerpoint slides which are for presentation support only; slides may or may not be posted and should not be considered

replacements for the textbook material. All students are required to access the Canvas system on a regular basis for

homework assignment details and submissions, announcements, and grading information. Additionally, students are

requested to download the Canvas Lock Down Browser on a wireless network enabled device of their choosing (tablet or

laptop) that can access Canvas from the classroom, and bring the device to every class session in order to take quizzes

and tests. Paper versions of quizzes and tests will be available for students without enabled devices but students using

paper tests must come to office hours to review corrected tests.

Faculty Web Page and MYSJSU Messaging

Course materials such as syllabus, handouts, notes, assignment instructions, etc. can be found on the Canvas

learning management system course website at http://sjsu.instructure.com. You are responsible for regularly

checking with the messaging system through MySJSU at http://my.sjsu.edu to learn of any updates.

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Course Description

The finance function and its relationship to other decision-making areas in the firm; the study of theory and

techniques in acquisition and allocation of financial resources from an internal management perspective.

Course Goals

BS/BA Program Learning Goals

Goal One: Business Knowledge

Understand basic business principles and demonstrate discipline-specific competencies as applied to local and

global environments.

Goal Two: Communication

Communicate ideas clearly, logically, and persuasively in oral and written format, using technology

appropriately.

Goal Three: Ethical Awareness

Recognize, analyze, and articulate solutions to ethical issues that arise in business.

Goal Four: Leadership, Teams and Diversity

Comprehend the challenges and opportunities of leading and working in diverse teams and environments.

Goal Five: Critical Thinking

Comprehend, analyze, and critically evaluate complex and unstructured qualitative and quantitative business

problems, using appropriate tools and technology.

Goal Six: Innovation

Recognize, analyze, and articulate strategies for promoting creativity and innovation.

Learning Outcomes

Course Learning Outcomes (CLO)

Upon successful completion of this course, students will be able to:

LO1 Demonstrate an understanding of financial analysis – CBPG #5. Critical Thinking

LO2 Demonstrate an understanding of time value of money - CBPG #5. Critical Thinking

LO3 Demonstrate an understanding of financial valuation - CBPG #5. Critical Thinking

LO4 Demonstrate an understanding of real asset valuation - CBPG #5. Critical Thinking

LO5 Demonstrate an understanding of risk & return - CBPG #5. Critical Thinking


This course is very data intensive: it is packed with business vocabulary and calculations, many of which will

be new to you. It requires a disciplined study approach from the beginning, since each concept builds on the

previous one. The importance of all this information is that it is relevant to all business professionals, whether

you specialize in finance, accounting, marketing, operations, human resources, engineering, or general

management. At the minimum, it will enable you to understand the role of the finance discipline in a

corporation, with emphasis on the theory and tools that are used to help company leaders make sound financial

decisions; learn how to ensure that the company has sufficient capital for operations, growth, and maximization

of shareholder wealth; and demonstrate how time value of money, risk, and diversification can contribute to

good decision-making in business and to your own accumulation of wealth and financial security. You will also

learn how to use finance in many practical applications of everyday life. If you choose to study finance at an

advanced level, this course will provide you with important foundational knowledge to build on. If you choose

to focus on other areas, this course will enable you to understand the relevance of finance concepts to your field

and to interface effectively with the finance function.

Required Texts/Readings

Textbook

Fundamentals of Financial Management, Concise Edition, 8th Edition

Author: Eugene F. Brigham, Joel F. Houston

ISBN: 9781285065137

Publisher: Cengage Learning

The book is available at the bookstore and from online sellers such as Amazon. You may buy a used/earlier edition (you

do NOT need the online Access Code) but you will be responsible for figuring out differences in page numbers, chapter

numbers, or homework problem details. The concepts do not change from edition to edition and the homework problems

only change slightly..

Other Readings

Internet Research: several assignments require internet research using search engines and websites such as Google and

Yahoo Finance; none require purchase of paid content.

Bloomberg Certifications: some assignments require use of the Bloomberg Terminals which are provided free of charge

at various SJSU locations, which have broad but specific hours of operation: students are responsible for arranging their

schedules to ensure completion of these assignments by the due dates indicated on the syllabus.

A Vocabulary/Concept Outline will be posted online in “Canvas Files” for this course before the start of the semester

which lists all the topics that may appear on tests. Students should print this outline, bring it to every class, make notes on

it to ensure understanding of each item as we cover it, and ask questions immediately if unclear It should also be used to

take notes while reading homework assignments. If this practice is followed, at the end of each course segment students

will have a complete knowledge of the material to be tested.

Other equipment / material

Financial Calculator: every student must bring an approved, non-networked financial calculator to every class

and exam session: the approved calculator models are HP10bii (recommended for ease of use), the TI BAIIplus,

and the HP 12c. No networked (phone or other) calculators will be permitted to be used during class and exams.

Some instruction will be given regarding the class-specific use of these calculators, but students are responsible

for familiarizing themselves with basic operations. These calculators are widely available at book stores, office

supply stores, and online, where used calculators may be found for less than $20.


Canvas Lock Down Browser: students are requested to download the Canvas Lock Down Browser on a wireless

network enabled device of their choosing (tablet or laptop) that can access Canvas from the classroom, and

bring the device to every class session in order to take quizzes and exams. Paper versions of quizzes and exams

will be available for students without enabled devices, but exam results may only be reviewed during office

hours.

Scantrons: each student should bring at least 1 form 882 (narrow, 100 question) Scantron to each class in case

they choose to elect to take paper-based quizzes and exams, or have trouble accessing Canvas online.

Course Requirements and Assignments

SJSU classes are designed such that in order to be successful, it is expected that students will spend a minimum

of forty-five hours for each unit of credit (normally three hours per unit per week), including preparing for class,

participating in course activities, completing assignments, and so on. More details about student workload can

be found in University Policy S12-3 at http://www.sjsu.edu/senate/docs/S12-3.pdf.

SEGMENT EXAMS: A Segment Exam with 15-25 available points will be given in class at the completion of

each Segment, targeted at testing your learning of the following topics:

Segment I: General Finance Topics

Forms of Organization; Organizational Accountability; Stakeholder vs. Agency Conflicts; Ethics; Financial

Markets; Financial Institutions; Careers in Finance.

Segment II: Financial Reporting & Analysis

Reading, Understanding and Evaluating Financial Statements; Understanding and Calculating Cash Flows;

Ratio Analysis.

Segment III: Risk & Return

Risk/Return Trade-off; Time Value of Money; Net Present Value and Internal Rate of Return; Interest Rates and

Yields; the Yield Curve; Bond Valuation.

Segment IV: Equity and Capital Structure

Capital Asset Pricing Model; Stock Valuation using CAPM; Stock Valuation using Comparables; Weighted

Average Cost of Capital; Optimal Capital Structure; Capital Budgeting; Sunk Costs.

Segment V: Working Capital and Cash Flow Forecasting (no separate Segment Exam but this information will

be included on the Final Exam)

Impact of Working Capital on Cash Flow; Forecasting Cash Flow Elements; Relationship between Cash Flow

and Shareholder Value

HOMEWORK and HOMEWORK CHECK QUIZZES: Homework is assigned for every class, in advance of the

lecture on the respective topic: the lecture is designed to highlight and elaborate on the reading and homework

material, not replace it. Some homework assignments requires submission and are graded (from 5-15 points

available per assignment, depending on assignment); most is not submitted but will be tested in “Homework

Check” quizzes in class on the date it is due, with 3-5 available points each. Homework solutions to calculation

problems will be posted so that you can self-check your work: you are responsible for attempting solutions, and

seeing me promptly in office hours if you have questions. Homework assignments that require submission must

be submitted in the format and by the due date indicated in Canvas. If there is a technical problem submitting

homework through Canvas, homework must be submitted in “paper” form at the start of class. No emailed

homeworks will be accepted. ALL LATE homeworks must be submitted in “paper” form, and will be subject to

a 50% point deduction. Homework requiring an essay or write-up will be graded primarily on content,

specifically focusing on a) what you learned and b) how it is relevant to the concepts you are studying in this

course. Write-ups must be spell- and grammar-checked and proofread as you would business correspondence

being submitted to management or a client: write-ups that contain spelling, grammar, vocabulary usage, or

http://www.sjsu.edu/senate/docs/S12-3.pdf


other errors will be subject to a point deduction ranging from 10-100% depending on severity of the issues.

Writing help is available from several University resources as described below; if you wish to learn more about

these, see me immediately, do not wait to lose points. ANY form of plagiarism on write-ups will result in a

NEGATIVE point score (it will hurt your total course grade) AND it will be reported to the University.

Please note that no Canvas quizzes may be taken outside of a proctored environment unless I specifically

approve it in advance. If you take a quiz on Canvas outside an approved proctored environment (the classroom,

the AEC lab, or another environment I provide advance approval for) you will be given a zero score. No quizzes

in this course are "open book" and it would not be fair to your fellow students who are being proctored.

University policy F69-24 at http://www.sjsu.edu/senate/docs/F69-24.pdf states, “Students should attend all

meetings of their classes, not only because they are responsible for material discussed therein, but because

active participation is frequently essential to insure maximum benefit for all members of the class. Attendance

per se shall not be used as a criterion for grading.”

Grading Policy

Grading will be based on the following, subject to any announced changes:

4 Segment Quizzes x average 15-25 points each = 75-100 points

2 Bloomberg Certifications and write-ups = 30 points total

10 points for prep/review of a guest speaker, if scheduled

Approximately 20 “Homework Check” quizzes x 3-5 points each = 60-100 points

1 comprehensive Final Exam x 50 points = 50 points

Total available points approximately 250

Additional quizzes/points may be added if needed to focus attention on sub-topics, which may change the

relative assignment weights.

No “extra credit” opportunities will be offered to make up for poor performance.

Quiz dates shown on the syllabus schedule are approximate: they may be adjusted depending on quickly we get

through each Segment’s materials. No make-ups will be offered for Homework Check quizzes or Guest Speak

write-ups. Makeups on Segment Quizzes and Final Exam will ONLY be offered in the documented event of an

unforeseen emergency which physically prevented the student from taking the test. Results and correct answers

for tests taken on Canvas are available immediately after the last section completes the test. Paper quizzes and

exams as well as written assignments are generally graded within 2-5 days and not “handed back” but may be

reviewed at any time during office hours. Grades will be curved based on the performance of all students in my

sections of this course this semester. The curve will be published periodically, usually within a week after each

Segment Quiz.

Passage of the Writing Skills Test (WST) or ENGL/LLD 100A with a C or better (C‐ not accepted), and

completion of Core General Education are prerequisite to all SJSU Studies courses. Completion of, or

co‐ registration in, 100W is strongly recommended. A minimum aggregate GPA of 2.0 in GE Areas R, S, & V

shall be required of all students.”

Note that “All students have the right, within a reasonable time, to know their academic scores, to review their

grade-dependent work, and to be provided with explanations for the determination of their course grades.” See

University Policy F13-1 at http://www.sjsu.edu/senate/docs/F13-1.pdf for more details.

http://www.sjsu.edu/senate/docs/F69-24.pdf

http://www.sjsu.edu/senate/docs/F13-1.pdf


Classroom Protocol

Class will be conducted in accordance with professional business meeting protocol. Disruptive, distracting,

disrespectful, or unsafe activity will not be tolerated, and will result in expulsion from the classroom, grade

point deduction, or both.

University Policies

General Expectations, Rights and Responsibilities of the Student

As members of the academic community, students accept both the rights and responsibilities incumbent upon all

members of the institution. Students are encouraged to familiarize themselves with SJSU’s policies and

practices pertaining to the procedures to follow if and when questions or concerns about a class arises. To learn

important campus information, view University Policy S90–5 at http://www.sjsu.edu/senate/docs/S90-5.pdf and

SJSU current semester’s Policies and Procedures, at http://info.sjsu.edu/static/catalog/policies.html. In general,

it is recommended that students begin by seeking clarification or discussing concerns with their instructor. If

such conversation is not possible, or if it does not address the issue, it is recommended that the student contact

the Department Chair as the next step.

Dropping and Adding

Students are responsible for understanding the policies and procedures about add/drop, grade forgiveness, etc.

Add/drop deadlines can be found on the current academic year calendars document on the Academic Calendars

webpage at http://www.sjsu.edu/provost/services/academic_calendars/. The Late Drop Policy is available at

http://www.sjsu.edu/aars/policies/latedrops/policy/. Students should be aware of the current deadlines and

penalties for dropping classes.

Information about the latest changes and news is available at the Advising Hub at http://www.sjsu.edu/advising/.

Consent for Recording of Class and Public Sharing of Instructor Material

University Policy S12-7, http://www.sjsu.edu/senate/docs/S12-7.pdf, requires students to obtain instructor’s

permission to record the course and the following items to be included in the syllabus:

“Common courtesy and professional behavior dictate that you notify someone when you are recording

him/her. You must obtain the instructor’s permission to make audio or video recordings in this class.

Such permission allows the recordings to be used for your private, study purposes only. The recordings

are the intellectual property of the instructor; you have not been given any rights to reproduce or

distribute the material.”

o It is suggested that the greensheet include the instructor’s process for granting permission,

whether in writing or orally and whether for the whole semester or on a class by class basis.

o In classes where active participation of students or guests may be on the recording, permission of

those students or guests should be obtained as well.

“Course material developed by the instructor is the intellectual property of the instructor and cannot be

shared publicly without his/her approval. You may not publicly share or upload instructor generated

material for this course such as exam questions, lecture notes, or homework solutions without instructor

consent.”


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http://www.sjsu.edu/provost/services/academic_calendars/

http://www.sjsu.edu/provost/services/academic_calendars/

http://www.sjsu.edu/aars/policies/latedrops/policy/

http://www.sjsu.edu/advising/



Academic integrity

Your commitment, as a student, to learning is evidenced by your enrollment at San Jose State University. The

University Academic Integrity Policy S07-2 at http://www.sjsu.edu/senate/docs/S07-2.pdf requires you to be

honest in all your academic course work. Faculty members are required to report all infractions to the office of

Student Conduct and Ethical Development. The Student Conduct and Ethical Development website is available

at http://www.sjsu.edu/studentconduct/.

Campus Policy in Compliance with the American Disabilities Act

If you need course adaptations or accommodations because of a disability, or if you need to make special

arrangements in case the building must be evacuated, please make an appointment with me as soon as possible,

or see me during office hours. Presidential Directive 97-03 at

http://www.sjsu.edu/president/docs/directives/PD_1997-03.pdf requires that students with disabilities

requesting accommodations must register with the Accessible Education Center (AEC) at

http://www.sjsu.edu/aec to establish a record of their disability.

Accommodation to Students' Religious Holidays

San José State University shall provide accommodation on any graded class work or activities for students

wishing to observe religious holidays when such observances require students to be absent from class. It is the

responsibility of the student to inform the instructor, in writing, about such holidays before the add deadline at

the start of each semester. If such holidays occur before the add deadline, the student must notify the instructor,

in writing, at least three days before the date that he/she will be absent. It is the responsibility of the instructor to

make every reasonable effort to honor the student request without penalty, and of the student to make up the

work missed. See University Policy S14-7 at http://www.sjsu.edu/senate/docs/S14-7.pdf.

Student Technology Resources

Computer labs for student use are available in the Academic Success Center at http://www.sjsu.edu/at/asc/

located on the 1st floor of Clark Hall and in the Associated Students Lab on the 2nd floor of the Student Union.

Additional computer labs may be available in your department/college. Computers are also available in the

Martin Luther King Library. A wide variety of audio-visual equipment is available for student checkout from

Media Services located in IRC 112. These items include DV and HD digital camcorders; digital still cameras;

video, slide and overhead projectors; DVD, CD, and audiotape players; sound systems, wireless microphones,

projection screens and monitors.

SJSU Peer Connections

Peer Connections’ free tutoring and mentoring is designed to assist students in the development of their full

academic potential and to inspire them to become independent learners. Peer Connections tutors are trained to

provide content-based tutoring in many lower division courses (some upper division) as well as writing and

study skills assistance. Small group and individual tutoring are available. Peer Connections mentors are trained

to provide support and resources in navigating the college experience. This support includes assistance in

learning strategies and techniques on how to be a successful student. Peer Connections has a learning commons,

desktop computers, and success workshops on a wide variety of topics. For more information on services,

hours, locations, or a list of current workshops, please visit Peer Connections website at

http://peerconnections.sjsu.edu for more information.


http://www.sjsu.edu/studentconduct/

http://www.sjsu.edu/president/docs/directives/PD_1997-03.pdf

http://www.sjsu.edu/aec


http://www.sjsu.edu/at/asc/

http://peerconnections.sjsu.edu/


SJSU Writing Center

The SJSU Writing Center is located in Clark Hall, Suite 126. All Writing Specialists have gone through a

rigorous hiring process, and they are well trained to assist all students at all levels within all disciplines to become

better writers. In addition to one-on-one tutoring services, the Writing Center also offers workshops every

semester on a variety of writing topics. To make an appointment or to refer to the numerous online resources

offered through the Writing Center, visit the Writing Center website at http://www.sjsu.edu/writingcenter. For

additional resources and updated information, follow the Writing Center on Twitter and become a fan of the SJSU

Writing Center on Facebook. (Note: You need to have a QR Reader to scan this code.)

SJSU Counseling and Psychological Services

The SJSU Counseling and Psychological Services is located on the corner of 7th Street and San Carlos in the

new Student Wellness Center, Room 300B. Professional psychologists, social workers, and counselors are

available to provide confidential consultations on issues of student mental health, campus climate or

psychological and academic issues on an individual, couple, or group basis. To schedule an appointment or

learn more information, visit Counseling and Psychological Services website at http://www.sjsu.edu/counseling.

http://www.sjsu.edu/writingcenter

http://www.sjsu.edu/counseling

http://www.sjsu.edu/counseling


BUS1 170 / Fundamentals of Finance, Spring 2016, MW 9:00 and 10:30am

This schedule is subject to change; updates will be posted on the Canvas system.

Course Schedule

Week Date Topics, Readings and Assignments:

due at start of class session, unless otherwise specified

n/a Due by Wed

Feb 10 Download the Canvas LockDown Browser on the device (tablet or laptop) you

will be using to take in-class quizzes and exams, and take the “Test Your

Browser” quiz posted on Canvas; 3 points. NOTE: if you do not have access to a

device you can bring to class for quizzes, you must see me BEFORE this due date

to arrange for alternate test taking instructions.

n/a Due by Mon

Feb 29 Bloomberg Certification 1: Economics

Each student is required to complete Bloomberg Market Concepts (BMC)

Certifications in 2 subject areas: Economics and Equities. The Economics module

is due by Feb 29; the Equities module is due by April 30. Each takes 2-3 hours

and is worth 15 points. Bloomberg is accessible FREE through the SJSU

Bloomberg Terminals: see posted instructions document for locations and hours

of operation and login directions. NO late submissions will be accepted. You are

responsible for planning ahead and allowing enough time to complete the

assignments, recognizing that there are a limited number of terminals available.

Completion of each of these assignments includes the following steps:

1. Review ALL the instruction documents in the Bloomberg folder on “Files” in

Canvas.

2. Register for BMC on a Bloomberg terminal: you must login correctly

including the Course Code Bloomberg has set up for this class in order to

receive credit. After each assignment due date Bloomberg will send me a list

of those students who have completed each module. If you have not registered

correctly and completed the module according to Bloomberg’s records you

will not receive credit for the assignment.

3. Complete the credential and check to make sure your Bloomberg account has

recorded it as “completed” and given you a final score.

4. Write a one page (at least 250 word) review of your experience acquiring each

credential, and submit it in Text form through the Canvas module for the

assignment (submit your Economics writeup under the Economics assignment

and your Equities writeup under the Equities assignment) .

Grading of this assignment is a total of 15 possible points based on BOTH your

score on the credential and the quality of your writeup, as follows:

Up to 10 points available based on score (example: if you received a score of 75

on Bloomberg, you would receive 7.5 points.)

Up to 5 points available based on your writeup quality. Your writeup must include

a) what you learned and b) how it is relevant to the concepts you are studying in

this course. Write-ups that do not address these issues or that contain spelling,




grammar, vocabulary usage, or other errors will be subject to a point deduction

ranging from 10-100% depending on severity of the issues. Note: ANY form of

plagiarism on write-ups will result in a NEGATIVE point score (it will hurt your

total course grade) AND it will be reported to the University ethics councils.

n/a Due by Sat

Apr 30 Bloomberg Certification 2: Equities

Same process for the second certification area (Equities).

1 Mon Feb 1 Course Orientation; Structure and Goal of the Corporation

Obtain book and calculator; start practicing “Test Your Calculator” problems

posted on Canvas. See me before or after class if you are not getting the correct

answers, your calculator may need to be reset.

1 Wed Feb 3 Forms of Organization review; Capital Markets; Calculator Quiz 1

1. Reading: SKIM Chapter 1 “Overview of Financial Management.”

2. Make a Table with the seven major forms of business organization in the left

column (sole proprietorship, general partnership, limited partnership, C corp,

S corp, LLC, and B corp) and 4 columns to the right: ownership structure,

liability, taxation, and “other” (miscellaneous). In each cell of the table, note

the pros and cons and any other special items regarding each form of

organization relative to each of the four characteristics. To answer question

fully, do online research, don’t rely on book which is very brief on these

important questions. Make sure to include B corps (not mentioned in book but

important current topic.) EXPECT A QUIZ.

3. Download “Test Your Calculator” instructions from Canvas Files for this

course. Learn how to calculate growth rate, also known as percent change, on

your calculator, as shown in “Test Your Calculator problem #1”. EXPECT A

QUIZ. YOU MUST BRING YOUR CALCULATOR TO EVERY CLASS

STARTING WITH THIS SESSION.

2 Mon Feb 8 Financial Institutions

1. Reading: Chapter 2 “Financial Markets and Institutions” sections 2.1-2.5 IN

DETAIL, for comprehension and vocabulary.

2. Online research: getting a feel for equity markets:

a) Do internet search and find out the total current Market Capitalization (in

US $) of all companies listed on the New York Stock Exchange, the

NASDAQ, the London Stock Exchange, the Tokyo Stock Exchange and the

Hong Kong Stock Exchange (also look at other exchanges if you like). If the

numbers are not in U.S. dollars, you must convert them to dollars at the

current exchange rate in order to analyze them. The internet offers many free

currency conversion apps to do this.

b) Also find out the # of companies listed on each of these exchanges

c) Using these two sets of numbers, calculate the average market cap per

company for each exchange. (Make sure you know what Market Cap means.)

What did you learn from this exercise? EXPECT A QUIZ.

3. Online research: getting a feel for the banking system:

a) Do internet search and find out what are the 10 largest banks in the world




in terms of total assets, expressed in U.S. $? If the numbers are not in U.S.

dollars, you must convert them.

What did you learn from this exercise? EXPECT A QUIZ.

NOTE the source and date of all data. Bring your work to class to discuss.

2 Wed Feb 10 Securities and the Stock Market

1. Reading: chapter 2, sections 2.6-2.7 read IN DETAIL for comprehension and

vocabulary.

2. Online research: understanding how to read stock market information.

Study Figure 2.3 (p. 45) in the book; then go to Yahoo Finance, look up any

company listed on NYSE or NASDAQ that interests you, and learn how to

read and explain what all the statistics on the “Summary” page mean, as if you

were teaching another person about the stock. Make sure you understand ALL

vocabulary and abbreviations on this page. EXPECT A QUIZ in which you

will be given the summary page for a DIFFERENT stock and need to explain

what the page tells you.

NOTE: only choose a company that is listed on the NYSE or NASDAQ; if it

is not listed on one of these exchanges, it will not contain complete

information.

3 Mon Feb 15 Segment 1 Quiz and Ethics Review/Discussion

1. Online Research:

a) Read about insider trading. What are the THREE key characteristics that

define something as illegal insider trading?

b) Find a case of a public company executive who served or is serving jail

time for a “white collar crime” that involves an ethical violation and

analyze why you agree/disagree.

2. Study for Segment I Quiz: refer to Vocabulary and Concept Outline for

Segment I.

3 Wed Feb 17 Income Statements

1. Reading: SKIM all of Chapter 3 “Financial Statements”; read IN DETAIL

sections 3.3 Income Statement and 3.9 Income Taxes. NOTE: do not

memorize tax rates, since they change constantly; understand concepts,

vocabulary, and how to calculate taxes if you are given the tax rates.

2. Do problems: 3.2, 3.3, and 3.14. EXPECT A QUIZ.

3. Online research:

a) Download the 2014 annual report or Form 10-K for ONE of these

companies: Starbucks, McDonalds, Walmart, or Tiffany’s.

b) Print out the 2014 Income Statement and compare it to the text book

examples: similarities, differences? Make sure you understand the

meaning of each line on the financial statement. BRING THIS INCOME

STATEMENT TO CLASS, YOU WILL BE QUIZZED ON IT.

NOTE: you must bring the FULL 2014 P&L from the company’s Annual

Report or 10-K; you may NOT use the abbreviated statements from the

annual report Highlights, Selected Financial Results, Yahoo Finance,

Bloomberg or other sites because they do not have complete information. If




you do not have a print out of the full P&L with you, you will not be allowed

to take the quiz and will receive Zero points for this assignment.

4 Mon Feb 22 Balance Sheets & Statements of Shareholders’ Equity

1. Reading: REVIEW all of chapter 3 AGAIN; read IN DETAIL sections 3.2

Balance Sheet and 3.5 Statement of Shareholders Equity,

2. Do problems: 3.1, 3.4, 3.8 and 3.9. EXPECT A QUIZ.

3. Online research: using the same Annual Report or 10-K you downloaded for

the last class, print out the 2014 Balance Sheet and Statement of Shareholders

Equity and compare it to the text book examples: similarities, differences?

Make sure you understand the meaning of each line on these financial

statements. BRING THESE FINANCIAL STATEMENTS TO CLASS,

YOU WILL BE QUIZZED ON THEM. ALERT: in one section of Chapter 3 the Book incorrectly defines “Working

Capital” as the same as Current Assets. The correct definition of Working Capital is

Current Assets Minus Current Liabilities.

NOTE: you must bring the FULL 2014 B/S AND EQUITY STATEMENT

from the company’s Annual Report or 10-K, you may NOT use the

abbreviated statements from the annual report Highlights, Selected Financial

Results, Yahoo Finance, Bloomberg or other sites because they do not have

complete information. If you do not have a print out of the full B/S and

Statement of Shareholders Equity with you, you will not be allowed to take

the quiz and will receive Zero points for this assignment.

4 Wed Feb 24 Cash Flow Statements

1. Reading: REVIEW all of chapter 3 AGAIN; read IN DETAIL sections 3.4

Cash Flow and 3.7 Free Cash Flow

2. Problems: 3.11, 3.12 and 3.13 parts a, b and c. EXPECT A QUIZ.

3. Online research: using the same Annual Report or 10-K you downloaded for

the last class, print out the 2014 Cash Flow Statement and compare it to the

text book examples: similarities, differences? Make sure you understand the

meaning of each line on the financial statement. BRING THE CASH FLOW

STATEMENT TO CLASS, YOU WILL BE QUIZZED ON IT.

NOTE: you must bring the FULL 2014 Cash Flow statement from the

company’s Annual Report, you may NOT use the abbreviated statements

from the annual report Highlights, Selected Financial Results, Yahoo

Finance, Bloomberg or other sites because they do not have complete

information. If you do not have a print out of the full B/S and Statement of

Shareholders Equity with you, you will not be allowed to take the quiz and

will receive Zero points for this assignment.

5 Mon Feb 29 Financial Statements Quiz and Calculator Quiz 2

1. Learn Calculator Problem II: calculating compound growth rates.

2. Study the 4 financial statements for a Financial Statement Quiz: review

Chapter 3 reading and Homeworks.

3. YOUR FIRST BLOOMBERG CERTIFICATION AND WRITEUP

MUST BE COMPLETED AND SUBMITTED.




5 Wed Mar 2 Ratio Analysis 1

1. Reading: Read all of Chapter 4 “Analysis of Financial Statements” IN

DETAIL.

2. Memorize the names and formulas for every ratio on table 4.2 plus the DuPont

Ratio. EXPECT A QUIZ.

6 Mon Mar 7 Ratio Analysis 2

Online research: Using the annual report or 10-K you previously downloaded,

calculate EVERY ratio on the Lecture (posted) plus the DuPont Ratios and

analyze/think about what these ratios tell you about the business. BRING YOUR

WORK TO CLASS. EXPECT A QUIZ.

6 Wed Mar 9 Ratio Analysis 3

Online research:

a) Download the 2014 annual report or 10-K for the company in the same

industry you didn’t choose before (eg, if you have been studying

Tiffany’s, now download Walmart).

b) Calculate every ratio on the Lecture plus the DuPont Ratios for the new

company.

c) Compare it to your company: which company is doing better on which

performance measurements? What did you learn about the companies from

analyzing this?

BRING YOUR WORK TO CLASS. EXPECT A QUIZ.

7 Mon Mar 14 Segment II Exam

Study for test: refer to Vocabulary and Concept Outline for Segment II. Use

Vocabulary and Concept Outline. Test yourself: can you write down all the major

components of each financial statement from memory, in the correct order? Can

you write down the formula for each financial ratio correctly? Do you know what

each ratio tells you about a business?

IF YOU PLAN TO TAKE THE EXAM ON PAPER, BRING A SCANTRON.

7 Wed Mar 16 Risk & Return and Time Value of Money, and Calculator Quiz 3

1. Reading: Read Chapter 5 “Time Value of Money” parts 5.1-5.5 IN DETAIL.

2. Practice all examples with your calculator: first do “Testing Your

Calculator” problem # III (TVM) posted in Canvas to make sure you

know how to use your calculator correctly. EXPECT A QUIZ. 3. Do problems: 1, 2, 3, 4, 5, and 8. EXPECT A QUIZ.

8 Mon Mar 21 Calculating TVM, and Calculator Quiz 4

1. Reading: Read/Review ALL of Chapter 5 IN DETAIL. Practice all examples

with your OWN calculator.

2. Learn “Test your Calculator” problem # IV: non-annual periods.

EXPECT A QUIZ. 3. Do problems: 10, 11, 12, 13, 14, 15, 16, 17, 19, 21 and 23. EXPECT A QUIZ.

8 Wed Mar 23 Net Present Value, IRR and Payback, and Calculator Quiz 5

1. Read Chapter 11 “Capital Budgeting” to understand CONCEPTS of NPV,

IRR and PayBack.

2. Do the following problems: Chapter 5 problems 20 and 33; Chapter 11




“Questions” 4 and 8; Chapter 11 problems 1, 2, 4, 6(a), and 12. EXPECT A

QUIZ.

3. Learn “Test your Calculator” problem V and make sure you know how to

calculate NPV and IRR on your calculator. EXPECT A QUIZ.

9 Mon Mar 28 Spring break

9 Wed Mar 30 Spring break

10 Mon Apr 4 Bond Valuation

1. Read Chapter 7 “Bonds and their Valuation” IN DETAIL. Read for concepts

and vocabulary.

2. MEMORIZE the vocabulary in Self-Test Question 1. Make sure you know

what the terms really mean.

Problems: Self Test 1 and 2; Problems 1, 2, 3, 4, 5, 6, 8 and 9. EXPECT A

QUIZ. ALERT: ERROR IN BOOK: several of the Self Test and regular

problems in the Book do not correctly convert Semi-annual yield to annual

yield. You must use the “converting non-annual to annual rate of return”

formula you have learned. Your answer will be slightly higher than shown in

the book.

10 Wed Apr 6 Interest Rates & Yields; the Yield Curve

1. Read Chapter 6 “Interest Rates” IN DETAIL. Pay close attention to

vocabulary and concepts. Do Self-Test questions 1 and 2, and Problems 1, 2,

4, and 5. EXPECT A QUIZ.

2. Online research: do a search for a graphic (pictorial) description of “the Yield

Curve” and study it. What are the axes? What are the points that define the

curve? What does it tell you? Why is it such an important concept in the

financial world? EXPECT A QUIZ.

11 Mon Apr 11 Finish Segment III, overflow and review

Review all section III vocabulary and homework problems;

BRING SPECIFIC QUESTIONS TO CLASS.

11 Wed Apr 13 Segment III Exam

Review all section III vocabulary and homework problems, study for exam.


12 Mon Apr 18 Diversification, Beta and CAPM, and Calculator Quiz 6

1. Read Chapter 8, Risk and Return. NOTE: you will NOT have to calculate

Standard Deviation, but you do need to understand what it means and how it

relates to risk.

2. Answer self-test questions.

3. Learn Calculator Problem #6: Weighted Averages. EXPECT A QUIZ.

12 Wed Apr 20 Diversification, Beta and CAPM con’t

1. Read Chapter 8 AGAIN, "Risk and Rates of Return," IN DETAIL. Focus on

concepts covered in the lecture: Diversification, Risk, Correlation, Beta, and

CAPM.

2. Do problems 8.2, 3, 4, 5, 7, 8, 9, 10, 11, 12. You should do all these problems

as a self-test to make sure you understand the CAPM calculation and how to




calculate it. EXPECT A QUIZ.

13 Mon Apr 25 Cost of Capital and WACC

1. Reading: read Chapter 10 “Cost of Capital” IN DETAIL

2. Test yourself on all Self-Test questions and Questions 2, 3 and 4.

3. Do problems 10-1, 2, 3, and 5. EXPECT A QUIZ.

13 Wed Apr 27 Leverage and Optimal Capital Structure

1. Reading: read Chapter 13 “Capital Structure and Leverage” IN DETAIL

2. Do problems 1, 2, 4, 6 and 8.

3. Study the Hamada Equation and CAPM and how they are used to complete

the example tables posted on Canvas. EXPECT A QUIZ.

REMINDER: YOUR SECOND BLOOMBERG CERTIFICATION AND

WRITEUP MUST BE COMPLETED AND SUBMITTED BY NO LATER

THAN SATURDAY APRIL 30. NO EXCEPTIONS.

14 Mon May 2 Stock Valuation

1. Reading: Chapter 9 “Stocks and their Valuations” focusing on understanding

concepts and vocabulary.

2. Online Research: using Yahoo Finance, look up 4 companies in different

industries (see Template for assigned industries) and create a table comparing

their current trailing PE ratio, their Earnings growth rate over the past year

(most recent year net income vs. prior year), their forecasted EPS growth rate

between now and one year from now (from Analyst Estimates), and their

forecasted growth rate in stock price between now and the 1 year analyst

estimate. Do these statistics seem to be related or follow any pattern?

USE THE TEMPLATE POSTED IN CANVAS.

HAND IN ASSIGNMENT IN PAPER FORM AT START OF CLASS TO

RECEIVE UP TO 4 POINTS OF CREDIT. Grading based on

Completeness, Accuracy, and Quality of Analysis. Any evidence of

plagiarism will result in NEGATIVE points for everyone involved. Must

be able to explain work if asked.

14 Wed May 4 Equity valuation using Comparables

Online Research: using Yahoo Finance, look up 4 companies in a single industry

(see Template for assigned Companies) and create a table comparing their ratios

for Price/Earnings, Price/EBIT, Price/Revenues, and Price/Book Value.

(REMEMBER to use per-share OR total company values to calculate ratios: you

can’t compare a per-share price with a total-company earnings number.) What

should stock prices be based on, and how does that related to each of these ratios?

What could explain the differences between the companies’ ratios?

USE THE TEMPLATE POSTED IN CANVAS.

HAND IN ASSIGNMENT IN PAPER FORM AT START OF CLASS TO

GET UP TO 4 POINTS OF CREDIT. Grading based on Completeness,

Accuracy, and Quality of Analysis. Any evidence of plagiarism will result in

NEGATIVE points for everyone involved. Must be able to explain work if

asked.

15 Mon May 9 Study for Segment IV Exam





15 Wed May

11 Working Capital Management

1. Read Chapter 15, “Working Capital Management”, carefully in its entirety.

Make sure you really understand what Working Capital is, what makes it go

up and down, and why it is so important to forecast. Learn all unfamiliar

vocabulary.

NOTE: as in a prior chapter, the book erroneously defines “Working

Capital” as the same as “Current Assets.” This is NOT the standard

definition of Working Capital. The definition of Working Capital (and

Net Working Capital) you should memorize is “Current Assets Minus

Current Liabilities.” 2. Do Self Test 1 to make sure you understand all the important vocabulary.

3. Read and answer Questions 15-1, 15-2, 15-6, and 15-7. By this time you

should be able to answer all these clearly.

4. Do Problems 1, 2, 3, 4, 5 and 6 to keep practice your mastery of these basic

calculations. EXPECT A QUIZ.

16 Mon May

16 Cash Flow Forecasting

1. Read Chapter 16 “Financial Planning and Forecasting” carefully in its entirety.

Pay particular attention to forecasting calculation methods.

2. Test yourself by doing "Easy Problems" # 16-1, 2, 3, 4, and 5. EXPECT A

QUIZ.

Final

Exam

Section 2: Wednesday, May 18, 7:15-9:30am

Section 4: Tuesday, May 24, 9:45am-12:00n

The final exam is held in the same room as class sessions unless otherwise posted.


bus1 170 / fundamentals of finance

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