MGMG 664 Study Cases in Finance: Case Topics

Week 1: Kick-Off
Topics:
1.Course specification: goals and objectives, description, course agenda, teaching methods, evaluation
and grades, teaching materials and resources
2.Corporate finance overview, financial model, financial performance evaluation, financial statements
analysis, etc.
Week 2: Case 2 The Battle for Value, 2016: FedEx vs. UPS
Topics
1. Define excellence from a corporate-finance perspective.
2. Assess economic profit analysis and, more generally, the measurement of financial performance
and health.
3. Evaluate the financial implications of rigorous competition and corporate transformation

Week 3: Case 6 The Financial Detective, 2016

Topics
1. Introduction to financial-ratio analysis, in particular, the range of ratios and the insights each
affords.
2. Show how the economics of individual industries and managerial choices and strategies account for
significant variation in financial ratios.
3. Illustrate how financial performance results from managerial choices; within industries, the wide
variation in financial ratios is often a result of differences in corporate strategy

Week 4: Case 12 H.J. Heinz

Topics
1. Introduce the mechanics of estimating a firm’s weighted average cost of capital
2. Practice in estimating WACC with emphasis upon the details of cost of debt and cost of equity
estimations.
3. Understand the concept of using the WACC of proxy firms as alternative estimates of a firm’s cost
of capital

Week 5: Case 18 Worldwide Paper Company

Topics
1. Introduce the mechanics of DCF analysis of go/no-go capital investment decisions.
2. Consider the principle of incremental analysis as the foundation for identifying relevant cash flows
for a project.
3. Introduce the impact of inflation upon cash flows and NPV
4. Review the calculation of weighted average cost of capital (optional)
Week 6: Case 22 The Procter and Gamble Company
Topics

1. To build competence in discounted cash flow analysis

2. To motivate an appreciation for cannibalization effects in project investment decisions
3. To encourage scenario analysis and the identification of “value drivers” in a discounted cash flow
model
4. To facilitate tie-ins between finance and marketing curriculum

Mid-term Examination: 29 October – 4 November 2021

Week 7: Case 26 The Procter and Gamble Company

Topics
1. Review many practical aspects of dividend and share buyback decisions, including signaling
and clientele effects, and the finance and investment implications of increasing dividend
payouts and share repurchase decisions.
2. Highlight practical considerations when setting a firm’s dividend policy.

Week 8: Case 28 AutoZone

Topics

1. Explore the hypotheses that share repurchases create real value or serve as a financial signaling
tool that increases share price.
2. Identify a high-performing company for which stock-price appreciation is consistent with other
financial performance metrics such as EPS growth and ROIC.
3. Illustrate that ROIC is not affected by repurchases, but does impact shares outstanding, earnings
per share, and the book value of equity

Week 9: Case 32 California Pizza Kitchen

Topics

1. Introduce the Modigliani-Miller intuition of capital structure irrelevance.

2. Establish how the cost of equity is affected by capital structure decisions by defining financial risk and
introducing the levered-beta capital asset pricing model (CAPM) equation.
3. Discuss interest tax deductibility and the valuation tax shields.
4. Explore the importance of debt capacity in a growing business.
Week 10: Case 33 Dominion Resources: Cove Point

Topics

1. Identify the tradeoffs between debt and equity in a capital structure.

2. Understand the forces at play that determine the capital structure of a regulated utility.
3. Understand the dynamics of a financial planning model regarding the impact upon EPS and financial
ratios as debt increases.
4. Learn to make a comprehensive recommendation regarding a capital structure plan that includes both
the sources of capital as well as the timing for the issuances and the impact upon relevant financial
ratios

Week 11: Case 36 JC Penney Company

Topics

1. Use financial ratios to identify a liquidity problem for a company.

2. Demonstrate the cash flow effects of operating losses on a company’s financial statements.
3. Illustrate cash flows with a sources and uses analysis.
4. Discuss funding alternatives consistent with creating an acceptable capital structure.
5. Discuss the likely signaling effect of adding more debt or equity for a company in financial distress,
whose debt rating is slipping and whose stock sales are at depressed levels.
6. Highlight the leadership challenges of a turnaround situation and the governance issues faced by the
board acting on behalf of shareholders during a turnaround.

Week 12: Problems and cases

Topics

1. Understand and be able to prepare the Statement of Cash Flows: Direct and indirect methods.
2. Analysis of the Statement of Cash Flows.

Final Examination: Take Home & Individual Assignment

Each class (Week 1-12): 3 hours, Saturdays, 13.30 -16.30 hrs.

Teaching methods/ multimedia/ Zoom in E-learning:

- Oral Presentation
- Group Discussion
- Workshop
- Lecture
- Q&A