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Corporate Finance

Capital budgeting, cost of capital, capital structure, payout policy and working capital decisions.

12 lessons · 33 exercises · about 4 hours · 3 free lessons

You will be able to

  • Build a project's incremental after-tax cash flows and judge it by NPV, EAA and the profitability index
  • Find a project's break-even volume and price and test its sensitivity
  • Estimate a cost of debt and a project beta, and turn them into a hurdle rate
  • Show how leverage, payouts and working capital policy change EPS, value and cash needs

Designed for: Analysts, finance managers and students who can discount cash flows and want to make the decisions a CFO makes.

Corporate Finance Core

Module 1 · Capital budgeting

  1. Incremental cash flowsDecide which cash flows belong in a project appraisal: sunk costs out, opportunity costs and side effects in.18 minFree
  2. Building a project modelTurn a project's operating plan into after-tax free cash flows, with depreciation, working capital and resale value.25 minMembers
  3. Projects with unequal livesCompare mutually exclusive projects that last different lengths of time with equivalent annual annuities.18 minMembers
  4. Capital rationingWhen capital is limited, rank projects by NPV per riyal invested, the profitability index, to get the most value from the budget.20 minMembers
  5. Sensitivity and break-even analysisFind the volume and price at which a project's NPV falls to zero, and see which assumptions matter most.22 minMembers

Module 2 · Cost of capital

  1. Cost of debt from yieldsEstimate what a company pays to borrow today, from its bond yields or from a government yield plus a credit spread.18 minFree
  2. Unlevering and relevering betaEstimate a project's beta from comparable companies by stripping out their leverage and adding back the project's own.20 minMembers

Module 3 · Capital structure and payout

  1. Leverage, EPS and ROESee how borrowing to buy back shares raises EPS and ROE in good years and cuts them in bad ones.20 minMembers
  2. The interest tax shieldValue the tax saved by deducting interest, and weigh it against the expected cost of financial distress.18 minMembers
  3. Dividends and buybacksCompare paying out cash as a dividend with buying back shares: what happens to the share price, EPS and shareholder value.18 minMembers

Module 4 · Short-term finance

  1. Working capital policyWork out what supplier credit really costs, and decide when to take an early-payment discount.18 minFree
  2. Cash budgetingBuild a monthly cash budget from sales, collection and payment patterns, and find when and how much funding is needed.22 minMembers