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COURSE INFORMATION
Course Title: FINANCIAL MANAGEMENT
Code Course Type Regular Semester Theory Practice Lab Credits ECTS
BAF 234 B 4 3 0 0 3 5
Academic staff member responsible for the design of the course syllabus (name, surname, academic title/scientific degree, email address and signature) Dr. Nertil Mera nmera@epoka.edu.al
Main Course Lecturer (name, surname, academic title/scientific degree, email address and signature) and Office Hours: Dr. Nertil Mera nmera@epoka.edu.al , Friday 09:40 AM - 11:40 AM
Second Course Lecturer(s) (name, surname, academic title/scientific degree, email address and signature) and Office Hours: NA
Language: English
Compulsory/Elective: Compulsory
Study program: (the study for which this course is offered) Bachelor in Economics (3 years)
Classroom and Meeting Time: E-311 (8:40- 11:30)
Teaching Assistant(s) and Office Hours: NA
Code of Ethics: Code of Ethics of EPOKA University
Regulation of EPOKA University "On Student Discipline"
Attendance Requirement: 75% Required
Course Description: BAF 234 - Financial Management course aims to introduced to concepts and tools that enable them to think critically about the financial opportunities and challenges faced by an organization. This course covers different topics such as financial statements analysis, budgeting, analyze investment options, and determine the best means of financing business endeavors. This course allows students discover ways of assessing both the return and the risk involved in a firm's financial decisions. The focus of this course is on solving practical business problems similar to those encountered in the workplace.
Course Objectives: This course is designed to introduce students to the fundamental issues of financial management and to the quantitative techniques used to address them. The main focus of Financial Management is on valuation criteria and decisions on capital investment through the cost of capital, risk and return. It helps to better understand the decisions on capital structure, dividend policies and the methods used by companies to raise capital.
BASIC CONCEPTS OF THE COURSE
1 Capital Budgeting: The process of planning and managing a firm’s long-term investments.
2 Capital Structure: The mixture of debt and equity maintained by a firm.
3 Cost of Capital: The minimum required return on a new investment.
4 Leverage: The use of borrowed funds in financing the assets or any investment.
5 Risk and Return : Risk implies future uncertainty about deviation from expectations and Return is the profit accruing from an investment.
6 Expected Return: is the profit or loss that an investor anticipates on an investment that has known historical rates of return.
7 Variance: is the average of the squared differences from the mean.
8 Standard Deviation: is a statistic that measures the dispersion of a dataset relative to its mean and is calculated as the square root of the variance.
9 Scenario Analysis: The determination of what happens to net present value estimates when we ask what-if questions.
10 Sensitivity Analysis: Investigation of what happens to net present value when only one variable is changed.
COURSE OUTLINE
Week Topics
1 Review of Syllabus. Introduction to the course.
2 Quick look on Financial Statements, Cash Flows and Investment Criteria. Recap of the first part of Making Capital Investment Decisions (Project Cash Flows: A First Look; Incremental Cash Flows; Pro-forma Financial Statements and Project Cash Flows; More on Project Cash Flows; Evaluating NPV Estimates; Scenario and Other What If Analysis; Additional Considerations on Capital Budgeting) (pages 375-309)
3 Continuing Making Capital Investment Decisions (Project Cash Flows: A First Look; Incremental Cash Flows; Pro-forma Financial Statements and Project Cash Flows; More on Project Cash Flows; Evaluating NPV Estimates; Scenario and Other What If Analysis; Additional Considerations on Capital Budgeting) (pages 375-309)
4 Somme Lessons from Capital Market History (Returns; The Historical Record; Average Returns: First Lesson; The Variability of Returns: Second Lesson; More on Average Returns; Capital Market Efficiency) (pages 310-349)
5 Introduction to Risk and Return (Expected Returns and Variances; Portfolio; Announcements, Surprises and Expected Returns; Risk: Systematic and Unsystematic; Diversification and Portfolio Risk; Systematic Risk and Beta; Security Market Line; The SML and Cost of Capital (pages 350-388) + Quiz
6 Continuing Risk and Return (Expected Returns and Variances; Portfolio; Announcements, Surprises and Expected Returns; Risk: Systematic and Unsystematic; Diversification and Portfolio Risk; Systematic Risk and Beta; Security Market Line; The SML and Cost of Capital (pages 350-388)
7 Cost of Capital (The Cost of Capital; The Cost of Equity; The Cost of Debt and Preferred Stock; The Waited Average Cost of Capital; Divisional and Project Cost of Capital; Company Valuation with the WACC) (pages 389-423)
8 Review for Midterm Exam
9 Midterm Exam
10 Introduction to Leverage and Capital Structure (The Capital Structure Question; The Effect of Financial Leverage; Capital Structure and the Cost of Equity Capital; Corporate Taxes and Capital Structure; Bankruptcy Cost; Optimal Capital Structure; Observed Capital Structure; A Quick Look at Bankruptcy Process) (pages 424-456)
11 Continuing Leverage and Capital Structure (The Capital Structure Question; The Effect of Financial Leverage; Capital Structure and the Cost of Equity Capital; Corporate Taxes and Capital Structure; Bankruptcy Cost; Optimal Capital Structure; Observed Capital Structure; A Quick Look at Bankruptcy Process) (pages 424-456)
12 Dividends and Dividend Policy (Cash Dividends and Dividend Payment; Does Dividend Policy Matter; Stock Repurchases: An Alternative to Cash; What We Know and Do Not Know About Dividend; Stock Dividends and Stock Splits) (pages 457-486)
13 Raising Capital (The Financing Life Cycle of a Firm: Early-Stage Financing and Venture Capital, Selling Securities to the Public: The Basic Procedure, Alternative Issue Methods, Underwriters, IPOs and Underpricing New Equity, Sales and the Value of the Firm, The Cost of Issuing Securities, Issuing Long-Term Debt, Shelf Registration)(487-520)
14 Review Before Final Exam
Prerequisite(s): N/A
Textbook(s): Essentials of Corporate Finance, Stephan A. Ross, Randolph W. Westerfield and Bradford D. Jordan, 10th edition
Additional Literature: Fundamentals of Financial Management, Eugene F. Brigham and Joel F. Houston, Concise 9th edition.
Laboratory Work: N/A
Computer Usage: Possible
Others: No
COURSE LEARNING OUTCOMES
1 To understand the fundamental principles of financial management
2 To learn the generation and valuation of cash flows in capital investment decisions
3 To learn how to measure risk and return and how to use it in portfolio selection
4 To learn more on dividends, dividend policy, stock splits and reverse splits
5 To analyze complex, unstructured qualitative and quantitative problems, using appropriate tools and techniques
COURSE CONTRIBUTION TO... PROGRAM COMPETENCIES
(Blank : no contribution, 1: least contribution ... 5: highest contribution)
No Program Competencies Cont.
Bachelor in Economics (3 years) Program
1 Students define the fundamental problems of economics 3
2 Students describe key economic theories 3
3 Students critically discuss current developments in economics 3
4 Students appropriately use software for data analysis 4
5 Students critically contextualize the selection of an economic problem for research within scholarly literature and theory on the topic 3
6 Students apply appropriate analytical methods to address economic problems 4
7 Students use effective communication skills in a variety of academic and professional contexts 4
8 Students effectively contribute to group work 3
9 Students conduct independent research under academic supervision 2
10 Students uphold ethical values in data collection, interpretation, and dissemination 5
11 Students critically engage with interdisciplinary innovations in social sciences 3
12 Student explain how their research has a broader social benefit 3
COURSE EVALUATION METHOD
Method Quantity Percentage
Midterm Exam(s)
1
30
Quiz
1
10
Final Exam
1
50
Attendance
10
Total Percent: 100%
ECTS (ALLOCATED BASED ON STUDENT WORKLOAD)
Activities Quantity Duration(Hours) Total Workload(Hours)
Course Duration (Including the exam week: 16x Total course hours) 16 3 48
Hours for off-the-classroom study (Pre-study, practice) 16 2 32
Mid-terms 1 13 13
Assignments 0
Final examination 1 17 17
Other 15 1 15
Total Work Load:
125
Total Work Load/25(h):
5
ECTS Credit of the Course:
5
CONCLUDING REMARKS BY THE COURSE LECTURER

In conclusion, the Financial Management course has provided a comprehensive exploration of crucial topics essential for understanding the complexities of corporate finance. Starting with a foundational review of the syllabus to the detailed analyses of financial statements, investment criteria, and capital budgeting decisions, each week has contributed to a deeper understanding of financial strategies and risk management. The examination of capital market history and the concepts of risk and return further enriched our insights into market dynamics and investment planning. Cost of capital and capital structure considerations underscored the strategic implications of financial leverage and optimal financing decisions. Moreover, discussions on dividends, dividend policy, and raising capital highlighted the various options to firms in their pursuit of growth and shareholder value. By integrating these principles with practical applications, the course equips students with the critical thinking and analytical skills necessary for success in the dynamic world of finance.
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