Applied Corporate Finance Real Companies, Real Data, Real Time

Aswath Damodaran

This 2-day applied corporate finance seminar will cover the following topics:

  • Discuss different interests that make up the modern corporation and their different objectives, potential conflict and problems, how to convert a risk measure into a hurdle rate, and examine the cost of debt and resulting cost of capital
  • Cover investment analysis – consider what a project is and how to estimate project cash flows, and examine different decision rules for determining a good or acceptable investment
  • Evaluate financing choices made by a firm – how much to borrow, types of financing, approaches to coming up with optimal debt ratio
  • Examine how much firms pay in dividends and whether they should pay more or less
  • Explore determinants of intrinsic value in a company and what managers can do to enhance value

Who Should Attend

The course is designed for participants with a wide range of backgrounds, from those with little exposure to corporate finance to those with several years of experience and it is also structured for both those who work at businesses (in corporate finance or general management) and for those who just value these businesses (portfolio managers, analysts).

Objective

The objective of this seminar is to provide participants with tools and techniques that have been developed in theory to answer corporate finance questions, and how to best apply them in practice. In addition, we look at the big picture of corporate finance, the interrelationship between corporate financial decisions and how these decisions affect the value of a business.

By the end of the sessions, we hope the participants will be able to answer the following questions:

  • Where and how should a business invest its resources?
  • How should a business raise funds to finance its investments?
  • How much should a business return to its owners and how much should it reinvest?
  • What can a business do to enhance its value?

Agenda

  • The class will start with a discussion of the different interests that make up the modern corporation – managers, stockholders, lenders, analysts and society – and their different objectives. The potential for conflict is large and many problems can be traced to this conflict. We follow up with the first of the big questions in corporate finance. What is risk and how do we convert a risk measure into a hurdle rate? In the process we look at different models of risk and return and how they can be used to assess hurdle rates in different currencies, countries and companies. We also examine the cost of debt and the resulting cost of capital for a firm.
  • In the second part of the session, we turn our attention to investment analysis. In particular, we consider what a project is and how to estimate cashflows for projects. We will draw a distinction between accounting earnings and cashflows and examine different decision rules that can be used to determine whether an investment passes muster.
  • In the third part of the session, we evaluate the financing choices made by a firm in terms of both how much it chooses to borrow and what type of financing it uses. We look at different approaches to coming up with the optimal debt ratio for a firm and map out ways of getting from a firm’s current debt ratio to its optimal.
  • In the fourth part of the session, we examine how much firms pay in dividends and whether they should pay more or less. In the process, we also look at when it makes sense to buy back stock instead of paying dividends. We close the class by tying corporate finance decisions to value.
  • In the final part of the session, we will bring all of these components together in a value assessment, which we will tie to corporate decisions. Thus, we will explore the determinants of intrinsic value in a company and what managers can do to enhance value.

Process

This is not a theory or an academic class but an applied, big-picture class. As I introduce concepts, models and measures, I will apply them to two real companies: Disney and Indofood. Thus, we will estimate the cost of equity and capital for both companies, evaluate what the right mix of debt and equity is at these companies and determine whether their policies on returning (or not returning) cash to stockholders makes sense. We will close the process by valuing both companies.

While the session will be delivered lecture-style, it is an open session where participants are encouraged to be actively involved, not only by asking specific questions that they need answers to but also by bringing in their experiences and companies into the discussion. If participants have laptop computers, they can bring them, as well as the financial statements of any company that they are interested in analyzing. Over the two days of the seminar, the participants will do a comprehensive corporate financial analysis of that company.

Session Breakdown

Session Time Material
Day 1
9 – 10.45 – The Objective in Corporate Finance
– Dueling interests
– First steps on hurdle rates
11-12.30 – Risk free rates & Currencies
– Risk premiums
– Relative risk measures
1.30 – 3.30 – From beta to cost of equity
– Debt & its cost
– Cost of capital
3.45 – 5.30 – Measuring returns
– Accounting returns & cash flows
– Side costs & side benefits
Day 2
9 – 10.45 – The rest of investment analysis
– The Financing Trade off
– The optimal mix of debt & equity
11- 12.30 – More on optimizing debt
– The right type of financing for a firm
– The financing principle
1.30 – 3.30 – Dividend policy
– Should you return more cash or less?
– Valuation 101
3.45 – 5.30 – Value Enhancement

Join Our Applied Corporate Finance Real Companies, Real Data, Real Time

Programme Fee

Application Fee (Incl Taxes) INR 2,500/-
Program Fees *INR 2,10,000/-
Books, Study Materials and Campus Fees *INR 40,000/-
Total Fee (exclusive of Application Fee) *INR 2,50,000/-
*Taxes as Applicable

Course Fee Installment Schedule

I II III IV V
5th May, 2018 1st August,2018 1st Nov, 2018 1st Feb, 2019 1st May, 2019
*INR 45,000/- *INR 40,000/- *INR 55,000/- *INR 55,000/- *INR 55,000/-
 *Taxes as applicable

Course Duration

12 months

Application Fee (Incl Taxes)

INR 2,500/-

Total Programme Fees

INR 2,50,000/-

+Taxes as applicable