UGBA 131

Corporate Finance and Financial Analysis

Course Outline
Spring 2016

OBJECTIVE
The objective of the course is to provide you with an understanding of Corporate Finance and the Capital
Markets from the perspective of a Chief Financial Officer. The course develops the framework necessary
for making decisions facing the CFO of a company. The analysis and command of financial formulas
from Haas Core Classes (accounting and finance) are a small part of this course. More important is your
ability to understand a business strategy and how that plays out in the industry in which it operates; this
includes how strategy leads to the Companys competitive advantage and position in the industry. In
other words, a firms capital structure and the risks/returns of debt and equity securities depend less on
formulas and more on the Companys position in its marketplace. The course will review the types of
capital available, from short- term debt to equity, and provide insight into the providers of capital.

TEACHING PHILOSOPHY
This class is flipped. I will do very little lecturing on the assigned readings. I expect you will read the
assignments prior to class and be in a position to apply them to cases/examples presented in the
classroom. Socratic is another word that could be used to describe my teaching. In this class, the
learning is based on inquiry and questioning the facts presented. I believe in the proverb: I hear, and I
forget, I see and I remember, I do and I understand. This class is about intellectual engagement
through which we learn to think critically. I believe education today has become mere training to find
the right answer at any cost, not trying to improve the mind (what is your SAT score?). The world of
life and business has very few right answers.
The major teaching vehicle in this course will be case studies with very few lectures on theory. This
method means a majority of class time will be used for the lively discussion of problems posed in the
cases. Questions on the cases will give you some guidance as to relevant issues, but class discussions will
frequently go beyond these questions. Your recommendations will be an important part of the class
clarifying material and enhancing your grasp of corporate finance.
Individual preparation and participation in class discussion are essential to the learning process when
using the case method. Homework assignments are due on some days. These assignments are graded,
however, your participation and articulation of your ideas is a key component of your grade. These
assignments must be turned in at the beginning of class and you should keep a copy for class discussion.
No assignment should be emailed, placed in faculty mailbox, or slipped under my office door. If late,
assignments should be hand delivered to me prior to class meeting.
In recent semesters I have found my students have great difficulty in stepping back from the moment and
concentrating on anything else but their next text message or other technologically-induced instant
connection. Students are losing the art of communication. Writing in other than e-mail or text message
shorthand is an unwelcomed burden for many students and researching topics beyond Wikipedia snippets
or Google searches is a rare chore in which few indulge. I encourage you to give it a go.

ETHICS
The Haas Code of ethics and the Berkeley Campus Code of Conduct bind students who take this class. The course
instructor expects nothing less than strict adherence to the codes. Students are expected to complete their own work
and may not try to pass off the work of others as their own. The course instructor has historically, and will in the
future, report lack of adherence of the codes to the Office of Student Conduct and actively take part in the
subsequent process. In addition, your ASUC has also developed its honor code which it hopes you will adhere to.
Web Links for the aforementioned Codes of Conduct:
http://www.haas.berkeley.edu/Undergrad/academic_dishonesty.html
http://sa.berkeley.edu/sites/default/files/UCB-Code-of-Conduct-new%20Jan2012_0.pdf
https://asuc.org/honorcode/index.php

UGBA 131
Corporate Finance and Financial Analysis

Course Outline
Spring 2016

ASSSIGNMENTS AND GRADES

I am focused on your learning and not your grades. Papers are not returned to you. You should remember you
will learn much more in the 90 180 minutes of class discussion than in looking at the grade on your paper or even
my comments from a 5 10 minute reading of your individual or group work. I am happy to review your written
work with you during office hours.
The faculty at the Haas School of Business developed a grading policy for all degree programs. The policy has three
goals:
- To ensure that grading is fair and consistent across courses;
- To encourage students to take their coursework seriously; and
- To hold faculty accountable to the rigorous standards of the Haas School of Business.
I am bound by this policy and must adhere to it. The policy requires me to have a mean GPA in the range of 3.4
3.6. Following are two examples of grade distribution that adhere to the policy:
Students

Students

20

30

A-

B+

20

SECTION
The discussion section is additive, versus complementary or redundant. The section is not a mirror of the lectures or
a review session. Consequently, lack of attendance of either the discussion section or the class meetings will affect
your ability to successfully complete this course.

Key Information
Instructor:
Office:
Email:
Office hours:

Stephen Etter, Lecturer

Greyrock Office; 2397 Shattuck; Suite 212 (at channing)
setter@berkeley.edu
Tuesdays, 9am-11am

GSI:
Email:
Office hours:

Teresa Haun, former UGBA131 student; 2nd yr MBA

teresa_haun@mba.berkeley.edu
Thursdays, 2:30 3:30pm in Haas F449 (Faculty Building, 4th floor)

Reading:

Course reader; www.study.net

Text Book: Business Analysis & Valuation; Using Financial Statements;
Palepu & Healy; 5th edition
Text Book from UGBA103 (you may need for review): Corporate Finance; Berk &
DeMarzo; Chapters 14 & 15

Grades:

Each graded item has a certain number of points attached to it. These points
determine the relative weight of each graded item that goes into determining your
final grade. The actual points are expected to follow the approximate weights
listed below. However, the instructor reserves the right to change, add, or delete
points as necessary:

UGBA 131
Corporate Finance and Financial Analysis

Course Outline
Spring 2016

Class Participation & Section

Business Analysis Cases (A,B,C & D)
Short & Long-Term Debt Cases
Valuation Cases
Final Exam - Case
Total

15%
20%
25%
25%
15%
100%

Segment One - Financial Analysis

Session
Mon 1/18

Week Topic
1
HOLIDAY

Assignment

Wed 1/20

Analyzing Financial Performance

Assign Case A

Fri 1/22

No discussion section!

Mon 1/25

Analyzing Financial Performance

BAV Chapters 2 & 3

Wed 1/27

Case A Discussion

Case A Due

Fri 1/29

Analyzing Financial Performance

BAV Chapter 2 (Q6, 7, 8 & 9) due

Mon 2/1

Case A Discussion
Assign Case B

Wed 2/3

Case B Discussion
Assign Case C

Case B Due

Fri 2/5

Financial Structures of Industries

BAV Chapter 5 (Q1, 2, 7 & 10) due

- Harvard Note 9-206-047; (pages 1-8)
- BAV Chapter 9

Mon 2/8

Case C Discussion
Assign Case D

Case C Due

Wed 2/10

Forecasting Financial Performance

Fri 2/12

Forecasting

Mon 2/15

HOLIDAY

Wed 2/17

Case D discussion

Case D due

Fri 2/19

Forecasting

Harvard #9-291-026

Mon 2/22

Case D Discussion
3

BAV Chapter 1
Harvard Note 9-206-047; (pages 9-end)

UGBA 131
Corporate Finance and Financial Analysis

Course Outline
Spring 2016

Segment Two - Short-Term Capital

Session
Wed 2/24

Week Topic
6
Short Term Financial Planning
Short Term Debt Case Assigned

Assignment
BAV chapter 10 (focus on short term
debt discussion); Harvard Business
Review Article: How Long Should You
Borrow Short Term?

Fri 2/26

Short Term Debt

Mon 2/29

Short Term Debt

Wed 3/2

Short Term Debt Case Discussion

Seasonality Case Assigned

Short Term Debt Case due

Fri 3/4

BAV Chapter 10 (Q1,3,8,10) due

Mon 3/7

Short Term Debt & Mid-Semester

Feedback
Short Term Debt Case Discussion

Wed 3/9

Seasonality Case Discussion

Seasonality Debt Case due

Fri 3/11

Debt & Capital Structure

Review Berk/DeMarzo; Chapters 14/15

Mon 3/14

BAV Chapter 10

Segment Three - Long-Term Capital

Private Equity Valuation
Value I Case Assigned

An Introduction to Cash Flow

Valuation Methods #9-295-155
Note on Valuing Private Businesses
#9-201-060; BAV Chapter 8

Wed 3/16

Valuation Case Discussion

Value II Case Assigned

Value I Case Due

Fri 3/18

Long Term Capital Planning

BAV Chapter 10 (Q2,6,7,11) due

Mon 3/21
Fri 3/25

10

Spring Break No Class!

Mon 3/28

11

Valuation Case Discussion

Wed 3/30

11

Long Term Debt

LT Debt Case Assigned

Fri 4/1

11

Long Term Capital Planning

Value II Case Due

UGBA 131
Corporate Finance and Financial Analysis

Course Outline
Spring 2016

Mon 4/4

12

Long Term Debt Discussion

LT Debt Case Due

Wed 4/6

12

Valuation-Private Equity Model

Value III Case Assigned

Harvard Business Review #95305,

Rehabilitating the Leveraged Buyout

Fri 4/8

12

Computer Lab

Mon 4/11

13

LBO Guest Lecture

Wed 4/13

13

Valuation-Private Equity Model

Fri 4/15
Mon 4/18

13
14

Computer Lab
Valuation-Private Equity Model

Does the CAPM Work? #82106

Wed 4/20

14

Discuss Private Equity Case

Value III Case Due

Fri 4/22

14

Computer Lab

Mon4/25

15

Course Review

Wed 4/27

15

Final Handed out

Segment Four Leverage Buyout

The Role of Private Equity Firms

UGBA 131
Corporate Finance and Financial Analysis

Course Outline
Spring 2016

Reader Contents
www.study.net

Harvard Case Study #9-206-047, Note on Financial Analysis

Harvard Case Study #9-201-039, Drivers of Industry Financial Structure
Harvard Case Study #9-206-048, Note on Financial Forecasting
Harvard Case Study #9-291-026, Note on Bank Loans
Harvard Business Review, reprint #86213 (article by Jerry A. Vicscione), How Long Should
You Borrow Short Term
Harvard Case Study #9-204-126, Cartwright Lumber Company
Harvard Case Study #9-187-038, Hanson Ski Products
Harvard Case Study #9-295-155, An Introduction to Cash Flow Valuation Methods
Harvard Case Study #9-898-156, Paint-Pen, Inc.
Technical Note on LBO Valuation (A) #9-902-004
Note on LBO Capital Structure, Module Note #9-214-039
Harvard Case Study#9-206-101, The Role of Private Equity Firms
Harvard Business Review, reprint #82106 (article by David W. Mullins Jr.), Does the Capital
Asset Pricing Model Work?