Self-Study
15
Overview
Finance
There are no prerequisites.

Course Description

Even an organization with excellent products and processes cannot survive without proper attention to its finances. This is because finance represents the flow of money through an organization—without money, no activities can last for long, and the business will fail. Corporate Finance addresses the practical aspects of fundraising and the deployment of cash.

By implementing the concepts in this course, you can improve an organization’s ability to raise funds at a reasonable price, while driving down the amount of working capital requirements and directing funds into those activities that will be best able to generate cash. You’ll gain an understanding of how to develop an appropriate capital structure and determine the best types of debt and equity funding. Additional tools are provided for calculating the cost of capital and constructing cash flows to analyze potential cash uses. Full coverage of risk management, supply chain management, and the use of measurements most applicable to corporate finance is also included.



Instructor

Steven M. Bragg, CPA

Steven M. Bragg, CPA, is a full-time book and course author who has written more than 70 business books. He provides Western CPE with self-study courses in the areas of accounting and finance, with an emphasis on the practical application of accounting standards and management techniques. A sampling of his courses include the The New Controller Guidebook, The GAAP Guidebook, Accountants’ Guidebook, and Closing the Books: An Accountant’s Guide. He also manages the Accounting Best Practices podcast.

Steven has been the CFO or controller of both public and private companies and has been a consulting manager with Ernst & Young and an auditor with Deloitte & Touche. He holds an MBA from Babson College, a Master of Finance from Bentley College, and a BA from the University of Maine (summa cum laude).



Course Specifics

Finance
Jan 17, 2018
There are no prerequisites.
SS3188017
284
None


Compliance Information

103220
Qualifies for CA Fraud: No


Learning Objectives

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

Chapter 1

  • Identify the players involved in the practice of corporate finance, the different roles that they play, and services that are routinely provided.

Chapter 2

  • Recognize the components of capital structure, identifying key terms, common characteristics, and situations that may call for its revision.
  • Cite an example of a tax shield and a common loan covenant.
  • Identify key elements of a debt maturity structure, noting which businesses should be concerned with this issue.

Chapter 3

  • Identify the methods used to construct financial plans, noting key characteristics, terms, and measurements associated with each method.

Chapter 4

  • Recognize the methods available for obtaining early-stage funding, noting the characteristics and structure of each.
  • Cite possible negative aspects associated with venture capital.

Chapter 5

  • Specify reasons for and against an initial public offering.
  • Identify the steps to prepare and undergo an initial public offering.
  • Cite public auditor registration requirements and the restrictions placed on a business during an initial public offering.

Chapter 6

  • Identify the different techniques available for selling shares outside of an initial public offering, citing key features, filing requirements, advantages, and restrictions associated with their use.

Chapter 7

  • Recognize terms associated with different types of debt financing, citing their characteristics and components.

Chapter 8

  • Recognize the concept behind leasing, including the elements analyzed in a lease versus buy decision.
  • Cite advantages and disadvantages of lease financing.

Chapter 9

  • Identify the formula components for cost of capital measurements.
  • Identify key characteristics associated with cost of capital and its derivations, noting variations, adjustments, and threshold value.
  • Determine the cost of capital given a set of circumstances.

Chapter 10

  • Identify the different discounted cash flow concepts, noting their defining characteristics and how they are used.

Chapter 11

  • Recognize the impact of working capital on corporate finance, identifying the techniques used to control the amount of funds invested in working capital.

Chapter 12

  • Recognize the alternatives available for determining the worthiness of proposed capital expenditures, identifying key components, characteristics, usage, and outcomes.

Chapter 13

  • Identify the different investment strategies, noting their key characteristics.
  • Identify different types of investments, citing the characteristics of the more common financial instruments.
  • Recognize the defining characteristics of primary and secondary markets, effective interest rates, and the discounted investment formula.

Chapter 14

  • Identify the components in a dividend payout formula, the implications of a high ratio, and the impact on investors when dividends are first issued.

Chapter 15

  • Identify the different types of acquisition strategies, citing key elements, requirements, and usage for each type.
  • Recognize the various methods that can be used to assess the valuation of a target company, identifying key components and proper usage.
  • Recognize the implications of making different types of payment offers to the owners of an acquisition target.

Chapter 16

  • Recognize terms associates with foreign exchange risk, identifying hedging techniques used to mitigate foreign exchange risk.
  • Identify types of foreign exchange hedges, noting their defining characteristics and proper usage.

Chapter 17

  • Cite the hedging techniques used to mitigate interest rate risk.
  • Identify various types of interest rate hedges, noting the requirements for each type.

Chapter 18

  • Identify the elements of supply chain financing, noting conditions under which this type of financing is most likely to be accepted by suppliers.

Chapter 19

  • Recognize the financial metrics ratios used to measure the ability to pay, noting the contents of the ratio formulas and what the metrics indicate.
  • Specify instances in which ratios can give misleading results.


Table of Contents

Chapter 1 – Overview of Corporate Finance

Learning Objectives

Introduction

The Nature of Finance

Corporate Finance Topics

Financial Management

External Players

The Balancing Act of Corporate Finance

Summary

Chapter 1 – Review Questions

Chapter 2 – Capital Structure

Learning Objectives

Introduction

Optimal Capital Structure

Capital Structure Analysis

The Financial Leverage Concept

Leverage Risk

Impact of Compensation on Leverage

Line of Credit Issues

Tax Shield Effects

Future Financing Flexibility

Market Timing

Loan Covenant Issues

Maturity Structure of Debt

Creditor Position Considerations

Debt Paydown

Cost of Capital Reduction

Market Signals

Planning for a Bond Rating

Timing of Changes to the Capital Structure

Summary

Chapter 2 – Review Questions

Chapter 3 – Financial Planning

Learning Objectives

Introduction

The Cash Forecast

The Short-Term Cash Forecast

The Medium-Term Cash Forecast

The Use of Averages

The Reliability of Cash Flow Information

The Impact of Special Events

The Master Budget

The Budgeted Income Statement

Components of the Budgeted Balance Sheet

Inventory

Capital Expenditures

Accounts Payable

Additional Estimation Elements

The Cash Line Item

The Budgeted Balance Sheet

The Financing Budget

Summary

Chapter 3 – Review Questions

Chapter 4 – Early-Stage Financing

Learning Objectives

Introduction

Angel Investors

Venture Capital

Dangers of Venture Capital

Summary

Chapter 4 – Review Questions

Chapter 5 – The Initial Public Offering

Learning Objectives

Introduction

Reasons for and Against an IPO

Preparation for the IPO

The Initial Public Offering

Share Lockup Period

Blue Sky Laws

Summary

Chapter 5 – Review Questions

Chapter 6 – Other Capital Raising Alternatives

Learning Objectives

Introduction

Regulation A Stock Sales

Solicitations of Interest

Forms 1-A and 2-A

Regulation D Stock Sales

Regulation D Rules

Regulation D Process Flow

The Form D Filing

The Accredited Investor

Private Investments in Public Equity

Crowdfunding

Title I – Reopening American Capital Markets to Emerging Growth Companies

Title II – Access to Capital for Job Creators

Title III – Crowdfunding

Title IV – Small Company Capital Formation

Title V – Private Company Flexibility and Growth

Seasoned Equity Offerings

The Rights Offering

Dilution

Summary

Chapter 6 – Review Questions

Chapter 7 – Debt Financing

Learning Objectives

Introduction

Overview of Debt Financing

The Line of Credit

The Borrowing Base

Invoice Discounting

Factoring

Receivables Securitization

Inventory Financing

Loan Stock

Purchase Order Financing

Hard Money Loans

Mezzanine Financing

The Long-Term Loan

Bonds

Agency Financing

Debt for Equity Swaps

Summary

Chapter 7 – Review Questions

Chapter 8 – Leasing

Learning Objectives

Introduction

The Lease Arrangement

The Lease or Buy Decision

Leasing Concerns

Leasing Advantages

Summary

Chapter 8 – Review Questions

Chapter 9 – The Cost of Capital

Learning Objectives

Introduction

Cost of Capital Derivation

Cost of Debt

Cost of Preferred Stock

Cost of Common Stock

Weighted Average Cost of Capital

Variations in the Cost of Capital

Adjustments to the Cost of Capital

Cost of Capital as a Threshold Value

Summary

Chapter 9 – Review Questions

Chapter 10 – Discounted Cash Flows

Learning Objectives

Introduction

Time Value of Money

Present and Future Value Tables

Net Present Value

Internal Rate of Return

Incremental Internal Rate of Return

Terminal Value

Inclusions in Cash Flow Analysis

Summary

Chapter 10 – Review Questions

Chapter 11 – Working Capital Management

Learning Objectives

Introduction

The Impact of Working Capital on Corporate Finance

Accounts Receivable Enhancements

Credit Enhancements

Billing Enhancements

Collection Enhancements

Accounts Receivable Policies

Summary

Inventory Enhancements

Product Design

Product Record Keeping

Inventory Acquisition

Inventory Ownership

Manufacturing Process Flow

Fulfillment

Inventory Disposition

Inventory Policies

Departmental Cooperation

Summary

Accounts Payable Enhancements

Terms Renegotiation

Early Payment Discounts

Payment Processing Frequency

Accounts Payable Policies

Researching Working Capital Enhancements

Working Capital Forecasting

Working Capital Strategy

Summary

Chapter 11 – Review Questions

Chapter 12 – Capital Expenditures

Learning Objectives

Introduction

Overview of Capital Expenditures

Net Present Value Analysis

Breakeven Analysis

The Profitability Index

The Payback Method

Real Options

Constraint Analysis

Capital Expenditure Proposal Analysis

The Outsourcing Decision

Complex Systems Analysis

Summary

Chapter 12 – Review Questions

Chapter 13 – Investment Alternatives

Learning Objectives

Introduction

Investment Guidelines

Cash Availability Scenarios

Investment Strategy

Types of Investments

Repurchase Agreements

Time Deposits

Certificates of Deposit

Bankers’ Acceptances

Commercial Paper

Money Market Funds

U.S. Government Debt Instruments

State and Local Government Debt

Bonds

The Primary and Secondary Markets

The Effective Interest Rate

The Discounted Investment Formula

Summary

Chapter 13 – Review Questions

Chapter 14 – Dividends and Other Payouts

Learning Objectives

Introduction

Dividend Mechanics

Types of Dividends

The Investor Viewpoint

The Company Viewpoint

The Stock Buyback Option

Deciding Between a Dividend and a Buyback

The Stock Dividend

Summary

Chapter 14 – Review Questions

Chapter 15 – Mergers and Acquisitions

Learning Objectives

Introduction

Acquisition Strategy

The Sales Growth Strategy

The Geographic Growth Strategy

The Product Supplementation Strategy

The Full Service Strategy

The Vertical Integration Strategy

The Adjacent Industry Strategy

The Diversification Strategy

The Market Window Strategy

The Bolt-on Strategy

The Low-Cost Strategy

The Industry Roll-up Strategy

Valuation of a Target Company

Liquidation Value

Real Estate Value

Relief-from-Royalty Method

Enterprise Value

Multiples Analysis

Discounted Cash Flows

Replication Value

Comparison Analysis

The Strategic Purchase

The Control Premium

The Valuation Floor and Ceiling

Payment Structures

The Stock-for-Stock Exchange

The Exchange Ratio

Issues Impacting the Stock Payment Decision

Stock Payment Based on Fixed Share Count or Fixed Price

The Debt Payment

The Cash Payment

Practical Considerations

Summary

Chapter 15 – Review Questions

Chapter 16 – Foreign Exchange Risk Management

Learning Objectives

Introduction

Foreign Exchange Risk Overview

Foreign Exchange Risk Management

Take No Action

Avoid Risk

Shift Risk

Time Compression

Payment Leading and Lagging

Build Reserves

Maintain Local Reserves

Hedging

Summary

Types of Foreign Exchange Hedges

Loan Denominated in a Foreign Currency

The Forward Contract

The Futures Contract

The Currency Option

The Cylinder Option

Swaps

Netting

Summary

Chapter 16 – Review Questions

Chapter 17 – Interest Rate Risk Management

Learning Objectives

Introduction

Interest Risk Overview

Interest Rate Risk Management

Take No Action

Avoid Risk

Asset and Liability Matching

Hedging

Types of Interest Rate Hedges

The Forward Rate Agreement

The Futures Contract

The Interest Rate Swap

Interest Rate Options

Interest Rate Swaptions

Summary

Chapter 17 – Review Questions

Chapter 18 – Supply Chain Financing

Learning Objectives

Introduction

Supply Chain Financing

Summary

Chapter 18 – Review Questions

Chapter 19 – Corporate Finance Measurements

Learning Objectives

Introduction

Corporate Finance Metrics

Cash Conversion Cycle

Days Sales in Accounts Receivable

Days Sales in Inventory

Days Payables Outstanding

Actual Cash Position versus Forecast

Earnings on Invested Funds

Ability to Pay Measurements

Interest Coverage Ratio

Debt Service Coverage Ratio

Fixed Charge Coverage Ratio

Cash Coverage Ratio

Debt to Equity Ratio

Average Cost of Debt

Borrowing Base Usage

Summary

Chapter 19 – Review Questions

Review Question Answers and Rationales

Glossary

Index

Qualified Assessment

Answer Sheet

Course Evaluation



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