01 Feb AGENCY PROBLEMS, FORECASTING,

Week 1 discussion

FINANCIAL MANAGEMENT

Much of the analysis done by financial managers is based on numbers that are different from what would seem to be the corresponding numbers presented in the financial statements. This difference is not due to any kind of cooking the books or other attempts to mislead anyone. One example is the use of market value rather than historical cost in the valuation of assets.

For your first post, define financial management. What are some other examples of the differences between financial management and financial accounting? Give examples.

Week 2 discussion

TVM MODEL

What are some of the assumptions behind the TVM calculations? How do these assumptions limit our application of these calculations?

Week 3 discussion

STOCKS AND BONDS

What are stocks and bonds? Describe how you could estimate their values. If you are investing in the stock market, which would you invest in and why?

Week 4 discussion

CALCULATING CAPM AND WACC FOR A REAL FIRM

Our discussion topic concerns the calculation of stock values using the capital asset pricing model (CAPM). Explain the CAPM model. The textbook provides a list of betas for a selection of stocks. Choose two firms from that list and discuss whether the betas are what you would expect. Be sure to explain why or why not. Calculate the returns based on the CAPM model. Be sure to state your assumptions.

Week 5 discussion

CAPITAL BUDGETING

Our textbook and lesson discuss some considerations that should be taken into account when doing capital budgeting: incremental earnings, interest expenses, taxes, opportunity costs, externalities, sunk costs, cannibalization or erosion, depreciation, salvage value, and others. For your first post, explain in detail what defines capital budgeting. Then explain how two of the considerations above affect capital budgeting.

Week 6 discussion

AGENCY PROBLEMS, FORECASTING, AND CORPORATE GOVERNANCE

Do some research and find some historical or current real-life examples of agency problems. Will the measures discussed in the text help to prevent problems like your examples in the future? What else would you advise? You may provide examples of agency problems from your own experience. If you do that, be careful to provide enough anonymity so that you won’t get in trouble.

Week 7 discussion

WORKING CAPITAL MANAGEMENT

Explain the cash conversion cycle (CCC). Describe the CCC for your employer or company in an industry in which you’re interested. What are some specific things that your company could do to decrease your cash conversion cycle? Let’s be sure to describe, in pretty specific terms, the CCC for our company and what could be done to shorten it.