Key Concepts in Finance

FIN15 Key Concepts in Finance

Autumn 2021

  • Topics

    The course consists of four parts. Part I looks at the management of existing resources, in particular, the use of financial statements and ratio analysis to assess a company’s financial health, performance, and future prospects. Emphasis is on the ties between operating activities and financial performance. Part II examines financial forecasting and financial planning, with emphasis on how to manage growth (and decline). Part III examines the financing of a company’s operations, including a review of the main security types, the markets in which they trade, and the company's choice of which security type to issue. Part IV considers the use of discounted cash flow techniques -- such as the net present value and the internal rate of return - to evaluate investments. It also looks at how to incorporate risk into the investment decision.  Finally, (if time allows) it offers an examination of business valuation and corporate restructuring in the context of the proper roles of shareholders, boards of directors, and managers in governing the public corporation.

    The specific topics of the course are as follows:

    Interpreting financial statements

    Evaluating financial performance

    Financial forecasting 

    Managing growth

    Financial instruments and markets

    The financing decision

    Evaluating investment opportunities

  • Learning outcome

    On completing the course, students are able to:

     

    Module Specific Knowledge:

    1. Know & explain the difference between net cash flow and net income
    2. Evaluate a firm’s financial performance
    3. Set up pro-forma financial statements
    4. Distinguish sustainable growth and actual growth in terms of financial performance
    5. Explain the basics of standard financial instruments
    6. Apply basic discounted cash flow techniques in valuing firms and making investment decisions

    Discipline-Specific Skills:

    1. Understand the principles of financial management 
    2. Finding the value of firms using their income statements
    3. Use appropriate discount rates in valuing firms

    General Competence:

    1. Address real worlds financial management problems in an analytical manner    
    2. Communicate proposed solutions to professionals
    3. Carry out independent work in solving financial problems for firms

  • Teaching

    The course is lecture-based. All lectures will be streamed & posted on Canvas.

  • Requirements for course approval

    Approval on three out of three problem sets 

  • Assessment

    Four hour home exam. The exam may be written in Norwegian or English. 

  • Grading Scale

    A - F

  • Literature

    Analysis for Financial Management, 12th edition, Robert C. Higgins

Overview

ECTS Credits
7.5
Teaching language
English
Semester

Spring. Offered first time spring 2021.

Course responsible

Professor Tore Leite, Department of Finance, NHH.