PONTIFICIA UNIVERSIDAD JAVERIANA

FACULTAD DE CIENCIAS ECONÓMICAS Y ADMINISTRATIVAS

DEPARTAMENTO DE ADMINISTRACIÓN
ÁREA DE FINANZAS

Syllabus for:

Gerencia Financiera Corporativa

Academic Period: III -2015

GENERAL DESCRIPTION
Last date Syllabus was updated: July 17, 2015
Credits: 3
Total Number of hours: 36
Recommended hours of study per week: 2 to 3 hours per each lecture hour
Pre-requisites: Información financiera para la toma de decisiones

PROFESSORS
Class Coordinator: Angelo Torres Professors teaching this class
Email: angel-torres@javeriana.edu.co Angelo Torres
Teléfono: 3208320 Ext. 3138

JUSTIFICACIÓN
By successfully completing this class, students should be able to manage complex business issues related to
procuring, deploying and managing corporate resources. It is expected, therefore, that students will develop a keen
eye towards value-oriented decision making, a skillset deemed crucial for successful long-term planning.

GENERAL PURPOSE
To develop a professional with a thorough understanding of Corporate Finance such as to use it successfully to
procure, deploy and manage corporate resources as well as to better appreciate the effect of capital market
expectations on the company’s value, whether it be private or publicly traded.
SPECIFIC OBJECTIVES
• Understand how good is your company’s budgetary process and its connection to invested capital
• Develop the skills to procure, manage and distribute company resources (capital invested) in ways that maximize
the potential of the enterprise
• Provide the student with a solid understanding of how short term and long term financing options can affect the
value of the Enterprise and how these too could affect the liquidity of the firm
• Provide the student with very solid understanding of what it takes to run a business which depends on publicly
issued debt and equity, so the benefits and disadvantages of private vs. public equity ownership can be debated
• To help the student make good use of financial statements and, consequently, make better decisions in
environments that are uncertain and affected by various forms of risks
• To develop student’s dexterity to manage risks
• To understand the new finance paradigms focused on innovation funding

CONTENT DESCRIPTION
This class builds on prior classes to extend the use of finance and accounting into the realm of business
management. Our course of study starts on the topic of budgetary efficiency and its connection to Invested Capital.
We then connect the concept of Invested Capital to the fundamentals of managerial finance (a.k.a. knowing how to
procure and allocate corporate resources), thereby addressing topics like Short and Long term financing, Mergers &
Acquisitions, Risk Management and, last but not least, the funding process for venture-like corporate projects.

Essentially, our class seeks (1) to expand your decision toolkit to help you manage company resources better by
adopting a value-oriented methodology and (2) to help you better appreciate how your company, by way of its
investors, is inextricably linked to Capital Markets regardless of it being a private or publicly traded company.

METHODOLOGY
This class is tailored for MBA level learning and uses a two-pronged approach: formal lecturing and a mixture of case
studies and contemporaneous examples relevant to the topics being discussed. Therefore, given this format, our
class requires informed and active participation from its students. To accomplish this, students are expected to come
to class having completed assigned reading/homework (when due) to help maximize collaborative learning.

EVALUATION
The professor will use practice workshops and written exams in order to assess the development of student
understanding regarding topics this class and prior finance classes covered. In addition, all exams are cumulative
and cannot be viewed as separate silos, as all material is and will be interconnected and built upon.

Our aim is to develop the students’ understanding by making the best use of handwritten calculations and some,
opportunistically used, technology solutions (like Excel) to elevate concepts to the practical realm. In the end, our
philosophy is that Excel is most powerful when one knows that its results are as good as its user’s inputs. If one
gives Excel garbage, Excel will produce garbage. Thus, our focus is on creating a sharp intuition that serves you all
well for the rest of your life.

What follows is a schedule for exams

Evaluation Date Percentage

Midterm Exam TBD, 7pm 37.5%
Final Exam TBD, 7pm 42.5%
Workshops, Quizzes, other Throughout semester 20.0%
TOTAL 100%

CLASS SCHEDULE
BIBLIOGRAPHY and BIBLIOGRAPHY and
W TOPIC INDIVIDUAL PREPARATION CLASSROOM INSTRUCTION
E
E
K

Chapter 7: El presupuesto Chapter 7: El presupuesto

Cash and Capital Budget maestro. Contabilidad Admi- maestro. Contabilidad Admi-
nistrativa (Horngren, Sundem y nistrativa (Horngren, Sundem y
Understanding efficiency of corporate Stratton) 13A. Edición. Pearson. Stratton) 13A. Edición. Pearson.
1 and divisional budget processes
Chapter 8: Presupuestos Chapter 8: Presupuestos
Reviewing the accuracy of projected flexibles y análisis de flexibles y análisis de
net profits by examining assumptions variaciones. Contabilidad variaciones. Contabilidad Admi-
in volume sales, sale prices and Administrativa ( Horngren, nistrativa (Horngren, Sundem y
fixed/variable costs Sundem y Stratton) 13A. Stratton) 13A. Edición. Pearson.
Edición. Pearson.

Invested Capital, relationship to finan-

cial statements and the connection to Presentation in Blackboard’s Presentation in Blackboard’s
budgets and corporate value Lecture 2 folder Lecture 2 folder
2
Financial Analysis Chapter 2: Introduction to Chapter 2: Introduction to
Vertical and Horizontal analysis financial statement analysis. financial statement analysis.
Corporate Finance (Berk, De Corporate Finance (Berk, De
Financial Ratios, Value Multiples and Marzo), Second Ed., Ed Marzo), Second Ed., Ed Pearson.
what each measures Pearson.

Financial Statements and the relation-

ship between Balance Sheet, Cash In-class workshop In-class workshop
Flow and Net Income Statements
Chapter 4: Return on Invested Chapter 4: Return on Invested
Calculating Efficiency, Profitability, Capital, Valuation (2010) Capital, Valuation (2010)
3 Financial Leverage, Invested Capital
and Working Capital from Fin Stmts In class valuation model In class valuation model
reconciliation (EVA vs. DCF) reconciliation (EVA vs. DCF)
Connection to Fin. Ratios lecture

ROIC and connection to EVA and DCF Case: Should Apple pay Divs? Case: Should Apple pay Divs?
 Chapter 4: Growth, Valuation Chapter 4: Growth, Valuation
Sustainable Growth Rate (g*) (2010) (2010)

4 Presentation in Blackboard’s Presentation in Blackboard’s

Implied Growth Rate Lecture 4 folder Lecture 4 folder

Case: How fast can Coke grow Case: How fast can Coke grow
What happens when Expected g > g* without diluting shareholders? without diluting shareholders?
How much is Coke expected to How much is Coke expected to
grow by its shareholders? grow by its shareholders?

Chapter 26: Working Capital Chapter 26: Working Capital

Short Term Capital Needs and the Management. Corporate Management. Corporate Finance
5 connection to sustainable growth Finance (Berk, De Marzo), (Berk, De Marzo), Second Ed.,
Second Ed., Ed Pearson. Ed Pearson.
Excess Cash
Presentation in Blackboard’s Presentation in Blackboard’s
Lecture 5 folder Lecture 5 folder

Chapter 23: Raising Equity Chapter 23: Raising Equity

Capital. Corporate Finance Capital. Corporate Finance (Berk,
(Berk, De Marzo), Second Ed., De Marzo), Second Ed., Ed
Ed Pearson. Pearson.
Organic Capital Funding
Chapter 24: Debt Financing. Chapter 24: Debt Financing..
Corporate Finance (Berk, De Corporate Finance (Berk, De
Inorganic Capital Funding: Long Term
6 Marzo), Second Ed., Ed Marzo), Second Ed., Ed Pearson.
Debt and Equity funding
Pearson.
Chapter 11: Estimating the Cost
Connection of type and market value
Chapter 11: Estimating the Cost of Capital, Valuation
of long term funds to WACC and
of Capital, Valuation
Enterprise Value
Chapter 23: Capital Structure,
Chapter 23: Capital Structure, Valuation (2010)
Valuation (2010)
Presentation in Blackboard’s
Presentation in Blackboard’s Lecture 6 folder
Lecture 6 folder

Chapter 24: Debt Financing. Chapter 24: Debt Financing..

Corporate Finance (Berk, De Corporate Finance (Berk, De
Marzo), Second Ed., Ed Marzo), Second Ed., Ed Pearson.
Pearson.
Chapter 25: Leasing. Corporate
Chapter 25: Leasing. Corporate Finance (Berk, De Marzo),
Sources of Long Term funding and
Finance (Berk, De Marzo), Second Ed., Ed Pearson.
value suppression which aren’t found
Second Ed., Ed Pearson.
within the basic financial statements
7 Chapter 27: Leases, Pensions,
Chapter 27: Leases, Pensions, Other Obligations, Valuation
Long Term Debt financing by using
Other Obligations, Valuation (2010)
suppliers as a “bank” (LEASING)
(2010)
Chapter 14: Pensions and
Pension Plans
Chapter 14: Pensions and Postretirement Benefits, Financial
Postretirement Benefits, Reporting & Analysis (2011)
Financial Reporting & Analysis
(2011) Case: FedEx

Case: FedEx

MIDTERM
 Chapter 28: Mergers and Chapter 28: Mergers and
Acquisitions. Corporate Finance Acquisitions. Corporate Finance
(Berk, De Marzo), Second Ed., (Berk, De Marzo), Second Ed.,
Ed Pearson. Ed Pearson.
8 Mergers and Acquisitions
Chapter 21: Mergers and Chapter 21: Mergers and
Acquisitions, Valuation (2010) Acquisitions, Valuation (2010)

Special Supplement in Special Supplement in

Blackboard’s Lecture 8 folder Blackboard’s Lecture 8 folder

Chapter 28: Mergers and Chapter 28: Mergers and

Mergers and Acquisitions (Continued) Acquisitions. Corporate Finance Acquisitions. Corporate Finance
(Berk, De Marzo), Second Ed., (Berk, De Marzo), Second Ed.,
Ed Pearson. Ed Pearson.
Special Topic: How can (and it sure
9 does, just so you know) the Chapter 21: Mergers and Chapter 21: Mergers and
announcement of a merger create Acquisitions, Valuation (2010) Acquisitions, Valuation (2010)
circularities in M&A valuation model?
Special Supplement in Special Supplement in
Blackboard’s Lecture 9 folder Blackboard’s Lecture 8 folder

Case: Omnicom in a merger of Case: Omnicom in a merger of

equals with Publicis equals with Publicis

Chapter 27: BM&A 7/e – Chapter 27: BM&A 7/e –

Macro Risk Management Introduction Managing Risk Managing Risk

- Valuing and using derivatives to Chapter 20, 21: BM&A 7/e – Chapter 20, 21: BM&A 7/e –
hedge diversifiable macro risks Understanding and Valuing Understanding and Valuing
10 Options Options
- Alternative ways to use Options
theory in managing resources Presentation in Blackboard’s Presentation in Blackboard’s
Lecture 10 folder Lecture 9 folder

Testing limits of traditional corporate

finance: When to invest in uncharted
territory without dwelling on Capítulo 3, 4, 5: Real Options Capítulo 3, 4, 5: Real Options
prospective losses? New Risk Analysis (Mun), Segunda edición, Analysis (Mun), Segunda edición,
Paradigm to fund Innovation Wiley Wiley
Investing in entrepreneurial projects
inside the corporation
11 Presentation in Blackboard’s Presentation in Blackboard’s
Investing in innovative companies Lecture 11 folder Lecture 10 folder
outside of the corporation (VC
investing)
General Reference: The Secret of General Reference: The Secret
Private vs. Public corporations: It Economic Indicators (2012) of Economic Indicators (2012)
doesn’t matter if you are publicly
12 traded or not, your company IS in the Presentation in Blackboard’s Presentation in Blackboard’s
market Lecture 12 folder Lecture 12 folder

FINAL EXAM

BIBLIOGRAPHY
• Valuation: Measuring and Managing the Value of Companies, 5th Edition (Wiley Finance)
• Damodaran, A. (2002). Investment Valuation. Wiley.Riesgo: Chapter 3 y 21
• Horngren, C. Suden, G. y Stratton, W. 2006. Contabiliadad Administrativa. México:. Pearson – Prentice hall.
• Hull, J. (2008). Options, Futures and other Derivatives. México: Pearson – Prentice Hall. Riesgo: Chapter
1,3,8,20,21,22
• Mcdonald, R. (2009). Fundamentals of Derivatives Markets. Pearson. Chapter 1
• Mun, Johnathan (2006), Real Options Analysis, Wiley Chapters 3,4 y 5
• Brealey, Myers & Allen, Principles of Corporate Finance 7/e. Chapters 20,21, 27
• Revsine, Collins, et al (2011), Financial Reporting & Analysis
• Bernard Baurmohl (2012), The Secrets of Economic Indicators

Cases to be used in class

• Should Apple pay dividends?
• Coca Cola, its sustainable growth and its future implied growth
• FedEx vs. UPS: A tale of two similar companies with very different accounting policies
• Merger of equals: Omnicom and Publicis
• New Case, to be announced, on the topic of risk management (TBD)