This course will teach you the fundamentals of how corporates make their investing and financing decisions.
We will begin by understanding the process of capital budgeting, i.e., the process by which the corporates make decisions about whether to invest in a long-term project or not. This involves understanding and calculating the cost of capital. A thorough assessment of expected and required rate of return for a project is required. We will also learn about the measures of leverage and their impact on a company’s earnings and financial ratios. We will look at both operating leverage and financial leverage. Next we will look at the various ways in which a corporation distributes its earnings to shareholders such as dividends and share repurchases. Finally, we will study the short-term sources of liquidity for a corporation and how they manage their working capital requirements.
The objective of this course is to teach you how to speak the language of corporate finance. More specifically you will learn about: