Case

LAHORE SCHOOL OF ECONOMICS

COURSE: Advance Corporate Finance

COURSE CODE : FNC 615

TERM : Winter 2012 (Sep – Dec)

INSTRUCTOR : Dr. Sohail Zafar. Office: J7-A. Extension 101. e-mail : drsohail@lahoreschool.edu.pk

TEACHING ASSOCIATE:

OBJECTIVE: This is advance course in business finance for MBA students; they have expected to have done Financial Management I & II, Financial Markets, and Investment courses. It is expected that students have covered basic topics such as: time value of money, valuation of securities, structure of financial markets, capital investment decision making rules (NPV, IRR), component of weighted average cost of capital (WACC), basics of capital structure and it impact called financial leverage effect resulting in financial risk, basics of risk and returns features of standalone securities and portfolios of securities including total risk and relevant risk of securities and portfolios.

This course is aimed at covering some of these topics in more detail with a focus on managerial decision making and its impact on valuation. The course begins by arguing that value creation should be the ultimate objective of top management of corporations. Since valuation requires expected performance estimates therefore financial forecasting and planning is taken up and various methods of projecting financial statements are discussed including skill to prepare projected financial statements under constant growth assumption and sustainable growth assumptions. Using projected financial statements students can extract free cash flows and free cash flows model of valuation is discussed in detail while focusing on the difference caused by the presence of non operating assets and liabilities. Once valuation is done then students are ready to value a potential target company in Merger & Acquisition analysis; other issues related to M&A activities such as break-even exchange ratio in an exchange of shares deal; maximum offer...