FIN 425 COMPUTER APPLICATIONS IN FINANCE

SYLLABUS Spring 2012

DR. HOUCEM SMAOUI COLLEGE OF INDUSTRIAL MANAGEMENT

FIN 425 COMPUTER APPLICATIONS IN FINANCE

Department of Finance & Economics

College of Industrial Management King Fahd University of Petroleum and Minerals Instructor: Dr. Houcem Smaoui Office: Building 24/Room 286 Phone: 860 7729 E-mail: hsmaoui@kfupm.edu.sa Office Hours: SM: 5:30-6:30pm or by Appointment Course Description

This course is an application of computer software in formulating and analyzing problems in Finance. The course is specifically designed to encourage use of sensitivity and what if projections, in financial modeling, financial statement analysis; capital budgeting, cash flow projections & risk analysis; working capital management; capital structure & financing decision; leasing; foreign exchange forecasting; valuation of securities; investment analysis & portfolio management; application of quantitative methods in Finance. This course develops and implements practical financial modeling skills for purposes of financial planning and decision making. The course is intended to enhance student skills in the development of various types of spreadsheet-based financial models. The course features quantitative modeling applications in financial analysis & planning; valuation techniques including derivative security valuation; capital budgeting; leasing; statistical analysis; risk analysis; optimization techniques; investment analysis and portfolio management.

Justification

This is a compulsory course for Finance major and an elective course for other CIM majors to fulfill the part of the program objectives.

Objectives

To expose students to pre-packaged computer aided finance programs To reinforce fundamental principles and theories learned in other Finance courses through the use of computing techniques and build-in functions that increase the time efficiency and minimize the risk of errors To enhance students' understanding of financial management concepts

Learning Outcomes

To develop and implement practical financial modeling skills for purposes of financial planning and decision making To achieve a hands on experience to arrive at solutions to many financial problems through prepackaged computer aided finance programs To understand the theory and practice of financial management

Prerequisites
This course assumes successful completion of FIN 420 (Investment).

FIN 425 COMPUTER APPLICATIONS IN FINANCE

SYLLABUS Spring 2012

DR. HOUCEM SMAOUI COLLEGE OF INDUSTRIAL MANAGEMENT

Required Textbook

Financial Analysis with Microsoft Excel by Timothy R. Mayes & Todd M. Shank, 5th Edition, Thomson South-Western, 2010.

Reference Materials

Computer-aided financial analysis by Ross M. Miller, Addison-Wesley Longman Publishing Co., Inc. Selected readings from Financial Analyst Journal Selected readings from International Review of Financial Analysis Journal Applying computer technology in financial management by Terrill R. Keasler, International Journal of Computer Applications in Technology 2000 - Vol. 13, No.3/4/5 pp. 93-97

Academic Honesty

Disciplinary action regarding student misconduct will depend on the nature, frequency, and severity of the offense. It may include, but is not limited to, failure of this course. Cheating will not be tolerated and will result in a zero grade.

Special Arrangement
Persons with disabilities may discuss possible accommodations with the instructor. If any special event or situation conflicts with the course requirements, students are required to discuss with instructor prior to the event or situation.

Computer Usage

The course materials and their applications are absolutely based on computerized program. The course materials will be posted in the WebCT and all communications including assignments and term projects will be through WebCT. The students will be responsible to prepare a term project which analyses the financial position of a chosen firm by using the computer-based programs like Microsoft Excel.

Grading

The final letter grade will be based upon ten assignments, group term project (in replacement of final exam), and class attendance/participation. All submissions have to be through WebCT Course webpage under the ONLINE SUBMISSION folder, no exception. The final course grade will be determined as per the weights specified below. Assignments (10) Term Project Presentation Participation & Involvement %50 %40 %5 %5 500 Points 400 Points 50 Points 50 Points

Grading Scale: Maximum points available are 1000

FIN 425 COMPUTER APPLICATIONS IN FINANCE

SYLLABUS Spring 2012

DR. HOUCEM SMAOUI COLLEGE OF INDUSTRIAL MANAGEMENT

A+ A B+ B C+ C D+ D F

4.00 3.75 3.50 3.00 2.50 2.00 1.50 1.00 0.00

960 1000 Points 920 959 Points 880 919 Points 800 879 Points 750 799 Points 700 749 Points 650 699 Points 600 649 Points Below 600 Points

Assignments

Assignments will be given according to tentative course schedule but the dates are subject to change. The assignments will be performed online in a given time slots and have to be submitted through WebCT Course webpage. All questions have to be answered in detail by applying the necessary tools/actions to get full credit. Simply writing/inserting the answer into the cells will not be credited. The policy of not accepting late submissions of the quizzes will be strictly enforced.

Group Term Project

The group term project is intended to replace the Final Exam. The group will make financial analysis limited to the concepts and tools covered in the classes. The aim of the project is to familiarize students with the information sources on internet and/or in the market and to apply the techniques and methods gained in the classes on the real life financial data of a company, which will be chosen by the group. Each report is expected to illustrate all the relevant functions of Microsoft Excel. Each group is required to gather all the relevant information about the company. The instructor will form new groups for those who do not form their groups. Each student in the group will contribute to the project by taking the partial responsibility. Each group will make a short presentation followed by the question and answer session. Each student has to make partial presentation and answer the questions. Each member of the group will evaluate the contribution of the other members of the group by filling out the questionnaire given by the instructor after the group presentation. Each group is required to submit 1-page introductory report on 21st of March, 2012, in which the group will give very basic financial facts about the company. It is very much recommended not to decide the company before doing a cautious research about the data availability. Thus, the group can not change the company later, which requires the group to be very careful about the data availability for the company. You will be furnished an additional handout explaining the nature of the project in detail later in semester.

Class Attendance, Participation & Involvement

Class attendance and participation & involvement are critically important and extremely recommended to be able to success in this class. Participation is not limited to attendance but requires the preparation before classes and positively engagement as well as actively involvement into the classroom discussion.

FIN 425 COMPUTER APPLICATIONS IN FINANCE

SYLLABUS Spring 2012

DR. HOUCEM SMAOUI COLLEGE OF INDUSTRIAL MANAGEMENT

Thus, full attendance does necessarily mean the collecting of full credit from the participation & involvement part.

Tentative Course Schedule

This is a tentative course outline and subject to change depending on the circumstances. CHAPTER 1 2 WEEKS 1 1

TOPIC Overview and Introduction to Excel Basics Assignment #1: Produce Exhibits 1-7 and 1-8 and Figure 1-11 Constructing Basic Financial Statements The Balance Sheet The Income Statement Cash Flow Statement Assignment #2: Produce Exhibits 2-1 through 2-8 The Cash Budget Assignment #3: Produce Exhibits 3-1 through 3-5 Financial Statement Analysis Tools: Evaluating Financial Performance through Ratio Analysis Assignment #4: Produce Exhibit 4-6 p.125 Financial Forecasting & Creating Pro-forma Statements Assignment #5: Produce Exhibits 5-1 through 5-8 Break-Even & Leverage Analysis Assignment #6: Produce Exhibits 6-1 through 6-4 Valuation Basics: The Time Value of Money Assignment #7: Produce Exhibits 7-1 through 7-14 Common Stock Valuation Assignment #8: Produce Exhibits 8-1 through 8-6 Bond Valuation Assignment #9: Produce Exhibits 9-1 through 9-9 The Cost of Capital Assignment #10: Produce Exhibits 10-1 through 10-5 Capital Budgeting Group Project Presentation Group Project Presentation

3 4

2 2

6 7 8 9 10 11

1 1 1 1 1 1