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8/2/2019 Corporate Finance First Course Toc
1/3
CORPORATEFINANCE-FIRST
COURSE
ByJawwadAhmedFarid
8/2/2019 Corporate Finance First Course Toc
2/3
C O R P O R A T E F I N A N C E : F I R S T C O U R S E
Pleasedonotphotocopyordistributewithoutpermission.AllrightsreservedAlchemySoftwarePvtLimited.
http://FourQuants.com
Page3of72
CONTENTS
SESSIONZEROLEARNINGOBJECTIVES......................................................................................................5
SESSIONIFINANCIALCONCEPTS.............................................................................................................9
1. Definitions..........................................................................................................................................9
i. OperatingCycle..............................................................................................................................9ii. Books.............................................................................................................................................9
iii. Liquidity.......................................................................................................................................9
iv. FinancialStructure.......................................................................................................................9
v. Maturity........................................................................................................................................9
2. FormsofOwnership...........................................................................................................................10
i. SoleProprietor.............................................................................................................................10
ii. Partnerships................................................................................................................................10
iii. Corporations..............................................................................................................................11
iv. LimitedLiabilityCompanies(LLC's)............................................................................................11
3. FinancialStatements..........................................................................................................................12
4. TheBalanceSheet..............................................................................................................................12
5. TheIncomeStatement.......................................................................................................................13
6. StatementofCashFlows....................................................................................................................13
7. TheAccountingNotes........................................................................................................................14
SESSIONIIREVIEWOFFINANCIALSTATEMENTS.........................................................................................15
1. Assets.................................................................................................................................................15
i. Currentassets..............................................................................................................................15
ii. PropertyPlant&Equipment.......................................................................................................16
2.Depreciation..........................................................................................................................................173.Liabilities................................................................................................................................................18
i. CurrentLiabilities.........................................................................................................................18
ii. LongTermLiabilities...................................................................................................................19
4.Networkingcapital...............................................................................................................................19
5.Equity.....................................................................................................................................................19
i. Shares...........................................................................................................................................20
ii. AuthorizedShares.......................................................................................................................20
iii. IssuedShares.............................................................................................................................20
iv. TreasuryShares.......................................................................................................................... 20
v. PreferredShares.........................................................................................................................20vi. CommonStock...........................................................................................................................20
vii. RetainedEarning.......................................................................................................................20
ix. Bankruptcy.................................................................................................................................20
6.IncomeStatement.................................................................................................................................21
SESSION3RISKANDRETURN.................................................................................................................23
1. Risk&Reward....................................................................................................................................23
i. ImportantPointstoremember....................................................................................................24
2.Return....................................................................................................................................................24
i. ReturnonEquity..........................................................................................................................25
ii. ReturnonInvestedCapital&ROE..............................................................................................25
8/2/2019 Corporate Finance First Course Toc
3/3
C O R P O R A T E F I N A N C E : F I R S T C O U R S E
Pleasedonotphotocopyordistributewithoutpermission.AllrightsreservedAlchemySoftwarePvtLimited.
http://FourQuants.com
Page4of72
iii. Paybackperiod..........................................................................................................................26
SESSIONIVTIMEVALUEOFMONEY:ANOVERVIEW...................................................................................27
1. DiscountRate.....................................................................................................................................27
i. Compounding...............................................................................................................................27
2. TimeValueofMoney.........................................................................................................................28
i. Examples......................................................................................................................................31
3. PresentValueinAction......................................................................................................................34
4. InternalRateofReturn(IRR)..............................................................................................................35
i. InternalRateofReturn(IRR)andcomments...............................................................................36
SESSIONVOPPORTUNITYCOSTANDCOSTOFCAPITAL................................................................................42
1. OpportunityCost&CostofCapital....................................................................................................42
i. Scenario1UnderstandingOpportunityCost............................................................................42
ii. Scenario2UnderstandingCostofCapital................................................................................42
2. WeightedAverageCostofCapital(WACC)........................................................................................43
SESSIONVICASESTUDY:ELECTRONICARTS..............................................................................................471. CaseStudy..........................................................................................................................................47
2. Exhibits...............................................................................................................................................69
APPENDIXA.........................................................................................................................................71
DISCLAIMER..........................................................................................................................................72
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