Intermediate Finance Syllabus Overview

An intermediate finance syllabus builds upon foundational financial principles, delving into more complex concepts and practical applications. It prepares students for advanced coursework and professional roles in finance. Expect a blend of theory, quantitative analysis, and real-world case studies.

Core Topics

Valuation and Investment Analysis

This is a central theme. Students learn discounted cash flow (DCF) analysis extensively, including free cash flow (FCF) estimation, cost of capital determination, and terminal value calculation. Relative valuation techniques, such as using price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) multiples, are also covered. Investment decision rules (NPV, IRR, Payback Period) are revisited with more intricate scenarios. Real options analysis, which considers the flexibility and strategic choices embedded in investments, may be introduced.

Capital Structure and Dividend Policy

Students explore the trade-offs between debt and equity financing. The Modigliani-Miller theorems are discussed, along with the impact of taxes, financial distress costs, and agency costs on optimal capital structure. Practical considerations in determining capital structure, such as industry norms and company-specific factors, are analyzed. Dividend policy, including the dividend irrelevance theory and factors influencing payout decisions (clientele effect, signaling effect), is covered. Stock repurchases are also examined as an alternative to dividends.

Working Capital Management

Efficient management of current assets (cash, accounts receivable, inventory) and current liabilities is critical. This section covers cash management techniques, credit policy decisions, inventory control methods (Economic Order Quantity - EOQ), and short-term financing options (lines of credit, commercial paper). Students learn to optimize working capital levels to balance liquidity and profitability.

Risk Management

Identification, measurement, and mitigation of financial risks are crucial. Students learn about different types of risk, including market risk (interest rate risk, currency risk, equity price risk), credit risk, and operational risk. Hedging strategies using derivatives (futures, options, swaps) are introduced. Value at Risk (VaR) and other risk measurement techniques might be covered.

Financial Modeling

Students enhance their spreadsheet modeling skills. They build pro forma financial statements, conduct sensitivity analysis, and create valuation models. The ability to translate financial concepts into practical spreadsheet applications is emphasized.

Quantitative Methods

A strong foundation in quantitative methods is assumed. This includes statistics (regression analysis, hypothesis testing), probability theory, and time value of money concepts. Regression analysis is used to estimate relationships between variables (e.g., beta estimation). Simulation techniques, such as Monte Carlo simulation, may be introduced for risk analysis.

Assessment

Assessment methods typically include exams (midterm and final), problem sets, case studies, and potentially group projects. Exams often require students to apply concepts to solve quantitative problems and analyze real-world scenarios. Case studies provide opportunities to analyze complex financial situations and make recommendations. Some courses may include presentations and class participation as part of the grade.