Financial Analysis and Management

The main teaching method used in the curricular unity is the flipped classroom method, to minimize the issues raised by the diversity of learning objectives and the heterogeneity of the speed of knowledge acquisition. To this end, in the first lesson students are provided with: a set of short documents prepared by the lecturer on:

(i) the main financial analysis tools (financial equilibrium and profitability);

(ii) a summary of the company valuation materials provided by Aswath Damodaran;

(iii) the main theories explaining the distribution of results and the selection of the capital structure;

(iv) a small number of articles published recently and in the best finance journals.

During the class period, students are encouraged to develop assignments that encourage self-study and energize the class. In the particular case of the work on profit distribution and capital structure selection, students must articulate a minimum number of articles on a subject that has received attention in at least one of the most relevant journals in corporate finance over the last 5 years.

In summary, the teaching and learning methodologies (TLM) adopted for this curricular unit are:

TLM1. Flipped classroom: Students have prior access to materials such as summaries of financial theories, financial analysis tools, and recent scientific articles. It promotes self-study, allowing class time to be used for discussion and practical application of the content.

TLM2. Theoretical-practical classes: These include an expository approach to introducing concepts and methodologies. They involve practical activities such as case studies based on real data and financial simulations.

TLM3. Group work: Encourages collaboration between students to analyze topics such as capital structure and dividend policy. They use specialized databases, such as ORBIS, for the economic and financial evaluation of listed companies.

TLM4. Guided discussions: Encourage critical analysis of relevant articles and topics published in leading scientific journals. They encourage the application of theoretical concepts in real business scenarios.

TLM5. Case studies: They address practical issues such as company valuation and the formulation of financial strategies. They include debates on corporate policies and strategic financial management decisions.

TLM6. Class presentations: Each working group presents the results of their analysis, promoting knowledge sharing and peer debate. They involve continuous feedback from the lecturer to improve students’ practical skills (LO4 and LO5).

The learning objectives (LO) of this curricular unity aim, on the one hand, to make up for the lack of knowledge of the basic concepts of finance among a group of students whose basic training is not in management, accounting, or economics and, on the other hand, to complement the content traditionally covered in Business Finance curricular units at 1st cycle level.

The learning objectives (LO) of this curricular unity are as follows:

LO1. Evaluate the financial balance from the asset and functional perspectives

LO2. Analyze economic and financial profitability

LO3. Apply company and business valuation methodologies

LO4 Identify and justify the most appropriate capital structure

LO5. Formulate profit distribution policies in line with strategic objectives

By the end of the curricular unity, students should have developed the following competencies/abilities (C):

C1 Assess the ‘financial health’ of companies in their different dimensions, in the short and medium/long term

C2 Monitor and intervene in company valuations

C3 Intervene in the definition of profit distribution policies and the selection of funding sources.

1. Financial Analysis

1.1 Financial balance from an asset perspective

1.2 Financial balance from a functional perspective

1.3 Assessment of Economic Profitability

1.4 Evaluation of financial profitability

2. Company and Business Valuation

2.1 Valuation using discounted cash flow models

2.2 Valuation using market multiple models

3. Capital Structure

3.1 The irrelevance of capital structure: Modigliani-Miller

3.2 Capital structure with taxes

3.3 Trade-off models (static and dynamic)

3.4 The Pecking Order Theory

3.5 Agency costs and capital structure

4. Profit Distribution Policy

4.1 The problem of the irrelevance of dividends

4.2 Alternative theories of dividend policy

4.3 Determinants of Dividend Policy