FIN4003 : BUSINESS FINANCE Instructor: Ghulam Hassan

Nothing but some Conceptual Understanding of Accounting 1, Accounting 2,

Business Mathematics & Business Statistics



The broad objective is to equip the students with the field of basic Finance!! The
course is designed to give an understanding of the fundamental finance concepts like
evaluating the financial performance of a firm; derive the expected rate of return;
understand the valuation of financial securities; evaluate the long term projects; and
calculate the financing cost. Business decisions are ultimately measured in financial
terms; as such understanding of the core concepts of finance will provide a foundation
for further study and knowledge and will help in future career opportunities. The
students should be able to identify link between the concepts that they have learned /
are learning in the course to the financial decisions that they are making in their
personal as well as on-job lives. Since the course gives a basic understanding of
many areas in finance, Additionally, some of the basic quantitative techniques and
analytical tools learned in the process will help the students in taking financial
decisions in an organizational framework.



The students after taking the course will be able to identify the area/areas which
interest them most. This will help the students in selecting the elective courses in
finance and ultimately in selecting their career path. Successful completion of this
course will enable the student to evaluate the financial performance of the firm;
calculate the measures of risk and return; understand the principles of discounted
cash flows; understand the valuation of financial securities and long-term projects,
and identify the techniques used to manage the firms current accounts so that an
acceptable level of net working capital is maintained




Lectures, Assignments, Presentation by students, Research Paper on Articles
Presented at HEC Digital Library, Seminar / Workshop, Report, Guest Speaker: (A
professional from the Financial Sector will be invited to share his / her experiences
with the students). Reading Material, Skills Development Exercises, Case studies and
many more




A Course Pack Essentials of Business Finance, By Ghulam Hassan (Latest Edition
2014)


1- Selected material from Fundamentals of Corporate Finance Alternate 5
th
edition,
McGraw-Hill.
2- Selected material from Fundamentals Financial Management 13
th
Edition,
McGraw-Hill.
3- Selected material from Essentials of Corporate Finance 2
nd
& 3
rd
Edition,
McGraw-Hill.
4- Economic & Business Review (DAWN newspaper)


1- http://businessfinance1.weebly.com For Course Assistant Material (Website of
Instructor for all business finance students)
2- http://www.afr.com For Financial Reviews
3- http://www.ebrjournal.net/sites/index.php For Business & Economic Reviews
4- http://www.dawn.com/business For Business & Economic Reviews (Local)
5- http://smallbusinessfinanceforum.com For Interesting Views of Finance
6- http://www.bloomberg.com & http://www.businessweek.com For International
view of practical Finance


Exam Type
Percentage
(%)
Consideration
Quiz 20% Take Average of All
Assignment & Case Studies 10% Take Average of All
Mid Term 25% Take Average of All
Final Term 30% Take Average of All
Class Participation 5% Take Average of All
Final Project 10% Take Average of All




Week Contents Activities
Part I (Basics of Business Finance)
1
An Introduction to Business Finance
An Overview & History of Business Finance
Basics of Business Finance.
Role of Finance in Business.
Business finance and financial manager.
Forms of business organization.
Taxation in Business (Corporations)
Goals of business finance.
Agency problem.
Modal of Financial Markets and Institutions in Pakistan
Types of Financial Markets and Institutions in Pakistan
Add Drop
Week
2 & 3
Understanding & Analyzing the Financial Statements
and Cash Flows:
The balance sheet.
The income statement.
Market Value Added and Economic Value Added.
Statement of Retained Earnings & Cash flows.
Standardized Financial Statements (Vertical & Horizontal)
Major categories of ratios (Ratio analysis)
The Du-point Equation.
Ways for Financing of Business & Movement of Funds
Quiz 1
Part II (Basics of Financial Calculations)
4 & 5
The Time value of Money:
Role of TVM concept
Present and future value of an investment
Return on investment
Number of periods (equates a present value & a future value
given an interest rate)
Present and Future Value of Multiple Cash Flows
Annuities and Perpetuities
Effective Annual Interest Rates
Inflation and TVM
Loan Types and Loan Amortization
Comparing Rates
Quiz 2


Final Project
will Assigned


Case Study 1
6
Bond and Their Valuation
Definition, types, Characteristics and features of bonds
Bonds Valuation & Basic relationships in bond valuation
Bondholders expected rate of return
Bond Yields: Yield to Maturity & Call, Current Yield
Risks associated with bond returns
Assignment 1
7 & 8
Stocks & their Valuation:
Working Capital
Sources of Short-Term Financing
Cash Budgeting
Shares and their basic features
Benefits from a share investments
Behavior of expected dividend growth and share price
Shares & their characteristics
Valuing the entire business (Except Corporations)
Common & Preferred Stocks, Constant Growth Stocks
Valuing Stocks (Expected to Grow at a Non-Constant Rate)
Valuing the Entire Corporation
Stock Market Equilibrium
Quiz 3



Mid Term
Part III (Advance use of Finance)
9 & 10
Net Present Value and Other Investment Criteria:
Net Present Value
The Payback Rule
The Discounted Payback
The Average Accounting Return
The Internal Rate of Return
The Profitability Index
The Practice of Capital Budgeting
Case Study 2
11& 12
Risk, Return and Financial Markets:
Percentage Returns
Dollar Returns
Expected Returns
Average Return Calculation
Variance and Standard Deviation
Coefficient of Variation
Risk Premiums & Risk Aversion
Average Annual Returns
Quiz 4
Portfolio expected returns
Portfolio variance and standard deviation
Diversification and portfolio risk
Systematic and unsystematic risk
13 & 14
Cost of Capital
The cost of capital concepts
Individual and weighted average costs of capital
Costs of capital and valuation
Capital structure
Capital structure decision (No taxes or other capital
market imperfections)
Taxation and capital structure decision
Debt equity ratio, cost of capital & the value of the firm
Optimal capital structure
The static trade-off theory
The pecking order theory
Evidence on capital structure determinants
Quiz 5

Final Project
Submission
Part IV (Basics of Islamic Financial System)
15
Introduction to Islamic Finance
The concept of Mudarba
The concept of Musharqa
The concept of Murabah
The concept of Ijarah
The concept of Istisna
The concept of Bai Salam
The concept of Takaful
Comparison with the conventional financial system
Assignment 2

Class
Participation
16
Presentations OR Report Presenting on Final Project
Revision for Final Term
VIVA /
Presentations