Finance-nterim Report on Case 3 – Group Project

| January 30, 2017

Question
Concourse | Advanced Corporate Finance

W EBSTER UNIVERSITY • W EBSTER GROVES, MO • GEORGE HERBERT W ALKER SCHOOL OF BUSINESS & TECHNOLOGY •
BUSINESS DEPARTMENT

ADVANCED CORPORATE FINANCE
FINC-5880
3 Credits
01/05/2015 to 03/06/2015

Section OA
S1 2015
Modified 11/23/2014

MEETING TIMES
Online throughout each week

CONTACT INFORMATION
Instructor: Lorraine Gilbertson
Email: Use course e-maill
Alternate Emal addresss: gilbertl@webster.edu.
Telephone: 816-478-6604

DESCRIPTION
This advanced study of corporate financial analysis and planning includes capital budgeting, cost of
funds, and capital structure and valuation. Selected topics that may be covered are leasing,
mergers, takeovers, business failure, reorganization, and liquidation. A combination of problemsolving and case study methodologies is used to illustrate theories and techniques helpful in
financial analysis and planning.

Requisites
FINC 5000

OUTCOMES
Outcome

Expectation

1. Students can determine the
value of fixed income securities

Students can calculate the implied value of convertible
securities as well as the value of bonds-with-warrants.

2. Students can analyze capital
budgeting decisions using
standard methodologies

Students can make capital budgeting decisions using
cash flow estimates and incorporating other sources of
cash, such as taxes and depreciation. Students can
explain the impact of profit margin and overall firm
profitability on capital budgeting decisions, particularly
when outside financing may be required to be able to

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complete projects.
3. Students can explain the impact
of capital structure decisions on
financial performance and cost
of capital

Students can determine the impact of changes in cost
of equity, cost of debt, the risk-free rate of interest, the
tax rate, and the levels of debt and equity on the firm’s
balance sheet on the overall cost of capital and the
effect on both project and firm profitability.

4. Students can utilize financial
analysis to assess an
organization’s financial condition

Students can apply ratio and financial statement
analysis skills to solve unstructured problems.

5. Students can construct
strategies to reduce risk utilizing
derivatives

Students can compute payoffs to put and call contracts
and value corporate projects using the real option
approach.

6. Students demonstrate
integration of more than one
area of finance when using case
studies.

Students can solve cases requiring integration across
various finance areas.

7. Students will demonstrate
knowledge of lease analysis.

Students can compare the value of leasing to that of
purchasing.

REQUIRED TEXTBOOK
Financial Management, Theory And Practice
Author: Brigham, Eugene F. And Michael C. Ehrhardt
Publisher: South-Western
Edition: Please Use Most Recent Edition

DELIVERABLES
General Activities
The field of finance requires students to have both practical ‘how-to’ numerical
analytical skills and a solid theoretical foundation. The course requires problem
solving, analysis, and discussion. Assignments will be required weekly.
Students should develop an awareness and appreciation for current issues and the
financial news plus knowledge of how financial data is reported. Each week
throughout the course the types of activities shown below may be required.

Readings
Readings are from the textbook, Financial Management, Theory and Practice, by
Brigham/Ehrhardt.
PowerPoint presentations are based on the same textbook.
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Written Assignments
Students will be required to complete questions/problems and cases. The
questions/problems are from the textbook. The cases are for real companies.
Cases may be individual or group assignments. Answer all questions in your own
words. If you cite or paraphrase someone else’s work, be sure to give that source
appropriate credit. Complete problems and other quantitative work in Excel. Show
how you derive each answer. If you use a formula, I can place the cursor over your
answer and see how you derived the answer. If you do not use a formula, enter each
input and result in a separate cell. Alternatively, you may use a financial calculator,
but must show the keystrokes on your Excel worksheet and enter each input and
result in a separate cell. Narrative may be completed in Excel (use textboxes or
merge cells) or Word. You may discuss or ask questions about assignments in the
discussion forum. However, you need to do your own work and may not share files in
any way.
It is not acceptable to submit quantitative work in Word, nor is it acceptable to
copy/paste from another source into Excel.
Assignments are available on Sunday of each week and due the following Sunday by
midnight. Late submissions will be penalized unless advance approval is obtained.
The instructor will grade assignments within 1 week of the due date and provide
detailed feedback on your assignment submission.

Discussions
Participation is a part of your grade. Each student is required to participate in the
regular discussion forum every week.
Start a discussion thread or respond to an existing thread every week. Meaningful
contributions to the discussion are required. It is not enough to simply say: I agree,
good post, cite just a URL, etc. If you refer to an article, be sure to summarize
important points and include the URL.
Feel free to help each other with homework problems, but limit help to discussion in
the forum. Do not include attachments, such as Excel worksheets or share files in
any other way.
I monitor the discussion forum and will respond to most questions within 24 hours,
occasionally longer if research is needed.
You may be assigned to a group project and expected to participate in the group’s
private discussion forum.

Practice Quizzes
Practice quizzes are optional and I do not see the results.
You may take practice quizzes as many times as you want.

Required Quizzes
You will be required to take a quiz certain weeks of the course. Quizzes will be
graded automatically. You may take a quiz only one time, so be sure of your answer
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before submitting it. Students must complete the quizzes on their own with no help of
any kind from anyone else.
Quizzes will be available on Sunday and are due the following Sunday by midnight.

Exams
There will be a mid-term and a final exam. Students must complete the exams on
their own with no help of any kind from anyone else.
Show how you derive all quantitative answers.
You may use a calculator, but need to show a step-by-step breakdown of how
solution derived. Enter each input and result in a separate cell.
Excel is easier and usually more accurate. If Excel does the work, I can put my
cursor over the answer and see how it was derived.

EVALUATION
Criteria
Type

Weight

Topic

Notes

Exam

20%

Mid-term

Covers Chapters 8, 11, 14, 17,
18, 19, 26

Exam

20%

Final

Covers Chapters 13, 20, 22,
23, 24, 25

Assignments

34%

Cases and chapter
assignments

Quizzes

16%

Several quizzes throughout
course

Discussion

10%

Discussion required every
week

Breakdown
Grade

Range

Notes

A range

90% up to 100%

450 to 500 points

B range

80% up to 90%

400 up to 450 points

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C

70% up to 80%

350 up to 400 points

F

Below 70%

Below 350 points

COURSE POLICIES
Time Commitment
Sign on early in the week.
Expect to spend substantial amounts of time, online and offline, to keep up with
readings and assignments. Students should ask questions in the discussion forum
on any unclear concepts or problems. The instructor will respond to most questions
within 24 hours; occasionally longer if research is required.

Discussion
Participate in the discussion forum every week. It is the best way to communicate
with other students and the instructor.
Explaining the how and why to someone else is perhaps the most important learning
role one can take

Excel and Other Files
All quantitative work must be completed in Excel. It is not acceptable to submit
quantitative work in Word, nor is it acceptable to copy/paste from another source into
Excel.
If you use a calculator for any calculation, you must show each step in deriving
answer. Enter each input and result in a separate cell. This will take a lot more time
than using Excel formulas and is often less accurate.
You can submit an entire assignment in one Excel workbook, using a separate
worksheet for each chapter and text boxes or merge cells for qualitative work. It is
also acceptable to submit qualitative work in a separate Word file.
Do not share files in any way (except for a group project).

Academic Honesty
This course may utilize electronic databases, such as Turnitin.com, to assist faculty
and students with their academic work

Revisions to Syllabus
The instructor reserves the right to change the syllabus at any time. Changes will be
announced.

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INSTITUTIONAL POLICIES
University policies are provided in the current course catalog and course schedules. They are also
available on the university website. This class is governed by the university’s published policies.
The following policies are of particular interest:

Academic Honesty
The university is committed to high standards of academic honesty. Students will be held
responsible for violations of these standards. Please refer to the university’s academic
honesty policies for a definition of academic dishonesty and potential disciplinary actions
associated with it.

Drops and Withdrawals
Please be aware that, should you choose to drop or withdraw from this course, the date
on which you notify the university of your decision will determine the amount of tuition
refund you receive. Please refer to the Add/Drop/Withdraw section of the academic
catalog for further information and to find the deadlines for dropping a course with a full
refund and for withdrawing from a course with a partial refund.

Special Services
If you have registered as a student with a documented disability and are entitled to
classroom or testing accommodations, please inform the instructor at the beginning of the
course of the accommodations you will require in this class so that these can be provided.

Disturbances
Since every student is entitled to full participation in class without interruption, disruption of
class by inconsiderate behavior is not acceptable. Students are expected to treat the
instructor and other students with dignity and respect, especially in cases where a
diversity of opinion arises. Students who engage in disruptive behavior are subject to
disciplinary action, including removal from the course.

Grading
Please refer to the most recent academic catalog for information on the Webster
University grading policy.

Student Assignments Retained
From time to time, student assignments or projects will be retained by The Department for
the purpose of academic assessment. In every case, should the assignment or project be
shared outside the academic Department, the student’s name and all identifying
information about that student will be redacted from the assignment or project.

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Contact Hours for this Course
It is essential that all classes meet for the full instructional time as scheduled. A class
cannot be shortened in length. If a class session is cancelled for any reason, the content
must be covered at another time.

SCHEDULE
When

Topic

Notes

Week 1
Online

Chapters 3 and 11

Assignments:
C11: Problems 1, 3, 6
*Case 1: Brinker International

Week 2
Online

Chapters 8 and 26

Assignments:
C8: Problems 1, 3, 4, 6
C26: Problem 1

Week 3
Online

Chapters 14 and 18

Assignments:
C14: Problems 1, 4, 5, 6, 10
C18: Problems 1, 2
**Case 2: IPO

Week 4
Online

Chapters 17 and 19

Assignments:
C17: Problems 1, 2, 3, 6, 10
C19: Problems 1, 2, 4
***First Interim Report on Case 3

Week 5
Online

Mid-Term
Examination,
Chapter 13

Assignments:
C13: Question 1
The mid-term exam will cover Chapters
8, 11, 14, 17, 18, 19, and 26

Week 6
Online

Chapters 20

Assignments:
C20: Problems 1, 2, 3, 6
***Second Interim Report on Case 3

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Week 7
Online

Chapters 22 and 23

Assignments:
C22: Problems 1, 2, 3
C23: Problems 3, 4, 5

Week 8
Online

Chapter 24

Assignments:
C24: Problems 2, 3
***Final Report on Case 3

Week 9
Online

Chapter 25, Final
Exam

Assignments:
C25: Problem 1, 2
The final exam will cover Chapters 13,
20, 22, 23, 24, and 25

*Case 1 (Individual
Project)

*Brinker International. Download
financial statements (income statement
and balance sheet) from the Internet (w
ww.brinker.com). Refer to the minicase
at the end of Chapter 3 and do Parts b,
c, d, e, f, g, h, i, j for Brinker (not for the
minicase) for the most recent year.
Show how you derive all answers.

**Case 2 (Individual
Project)

Initial Public Offering. Select a company
that has gone public in the last few
years and listed on an organized
exchange anywhere in the world.
Prepare a typewritten paper, double
spaced, no longer than 3 pages plus
bibliography listing sources of
information. Include as many exhibits
as you wish. Issues you should include
in the case are:
1. Introduction of company. What
business is the company in? When
was the company established?
When did the company go public?
Why did the company decide to go
public?
2. What exchange lists the stock?
Why did the company decide to list
on that exchange. What is stock
symbol?
3. Who was the investment banker?
Why did the company choose that
investment banker? Was IPO done
on an underwritten or best efforts
basis? How much was paid to the
investment banker?

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4. How many shares were issued?
What portion of the company did
insiders retain?
5. What was the offer price per
share? How was the offer price
decided? How much money was
raised?
6. Has stock price changed since
IPO? What was the price at end of
first day? Estimate the amount of
money left on the table? What is
current price?
7. What did the company use the
money for?
8. Anything else that you think is
interesting about the IPO

***Case 3 (Group
Project)

Groups of 2-5 members will be
established. Each group should choose
a company that is listed on a stock
exchange, and whose financials can be
acquired online. All group members
are responsible for the entire project.
The case will be completed in 3 phases,
and findings will be presented by interim
reports Weeks 4 and 6 and a final
report Week 8.
Inte rim Re port 1:
1. Choose a company whose
financials you can acquire
online or in print.
2. Spread 3 years of financials
for the company using Excel.
Do actual fiscal year-ends, not
estimated.
3. In all calculations, use real
numbers from the company’s
financials, not reported ratios
provided by online and other
sources. Do all calculations for
the most recent 3 years
available.
4. Collect stock data—price,
shares outstanding, insider
ownership, insider
transactions, stock
repurchase program, options,
etc.
5. Calculate financial ratios and
compare to industry average.
Do the same ratios that were
required for Case 1. What
can you conclude from the
ratios? Any warning signs?

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Anything that stands out?
The first interim report is due Week 4. It
should start off with an introduction or
overview in which you provide a brief
background of the company, the stock
exchange on which it trades, and
individual responsibilities. It should
also include #4 and #5 above. Attach
the balance sheet and income
statement to the report.

Inte rim Re port 2:
6. Perform common size analysis
for 3 years. What does this
analysis tell you about your
company? Are any trends
apparent?
7. Use the extended DuPont
equation for 3 years to
provide a summary and
overview of your firm’s
financial condition
8. Calculate the cost of each
capital component, after-tax
cost of debt, cost of preferred,
and cost of equity with the
DCF method and CAPM
method. Do these
calculations for 3 years.
9. Estimate the company’s
WACC for 3 years, as well as
the WACC it should use for
the future.
The second interim report is due Week
6. This report should make any
necessary corrections and build on the
first interim report. It should include #6,
7, 8, and 9 above. Attach the balance
sheet and income statement to the
report.

Final Re port:
10. What is your summary of this
company’s financial condition?
11. What major factors should the
company be aware of as it
evaluates possible investment
projects in the future?
12. Would you be interested in
investing in this company?
Why or why not? Are there
additional factors that aren’t a
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part of this case that you
would investigate before
making a decision, & if so,
what factors?
The final report should be
comprehensive, include all necessary
corrections, build on the interim reports,
and include #10, 11, and 12 above.
The report should be 8-10 pages,
double-spaced, plus a bibliography.
Include the balance sheet and income
statement as attachments and as many
other exhibits/attachments as you wish.

Re ports (Summary):
13. First interim report due Week
4
14. Second interim report due
Week 6
15. Final report due Week 8

Othe r:
16. As with all assignments, the
more closely I can follow your
methodology and “see” where
your numbers come from the
better the outcome.
17. Each group member should
complete a peer evaluation,
ranking each member
(including yourself) 1, 2, 3,
etc. and include narrative
providing rationale. I use the
peer evaluation as a factor in
assessing individual
contributions to the success of
the project. In most cases, all
group members receive the
same grade, but not if a
member doesn’t contribute a
fair share. The peer
evaluation is kept confidential
and not shared.
18. The project is graded based
45% on individual effort, 45%
on group results, and 10%
peer evaluation

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