Corporate Finance II

Previous knowledge: financial accounting, financial calculation (time value of money) and financial analysis

Classes will be based on the teaching-learning process, having a theoretical-practical nature. The exposition of theoretical material focuses on the fundamental concepts of the defined syllabus.

Expository, participatory and self-study teaching-learning methodologies will be used, with the analysis of real business cases taken from different sectors that present a variety of financial decisions. The learning experience is based on theoretical exposition, problem solving, case discussions and lectures, where the student must learn to apply business finance techniques to complex financial situations.

a) Objectives

The main objective of this UC is to leverage the knowledge acquired in Business Finance I.

It is intended:

i. encourage students to apply their skills and abilities in the analysis of real cases, and should recommend decisions as you would expect from a senior executive or a financial advisor.

ii. provide knowledge on the latest topics in corporate finance many of which involve advanced valuation techniques and other issues related to optimal capital structure, project finance and share buybacks, dividend policy, IPOs, emerging market investments and behavioral finance .

b) Competencies

It is intended that, at the end of the curricular unit, students will be able to:

1. Recognize the importance of the finance function in organizations;
2. Understand the impact of financial decisions on the company’s value creation;
3. Identify, characterize and select different sources of medium and long-term financing;
4. Assess the cost of financing a company;
5. Explain the concept of capital structure and characterize different approaches;
6. Identify and describe the factors that determine the capital structure of companies;
7. Characterize the forms of payment of dividends and their effects;
8. Identify the explanatory factors of the dividend policy;
9. Recognize the importance of short-term financial management in the company’s financial balance, using the appropriate tools for its management.

From an application point of view, it is intended that students are able to use knowledge to make faster, more flexible and informed decisions with a real impact on companies.

1. INTRODUCTION

2. INVESTMENT DECISIONS: AN INTRODUCTION

2.1. The economic and financial decision to implement an investment project;

2.2. Decision criteria in the acceptance of projects

2.3. Real options in the valuation of investments

3. MEDIUM- AND LONG-TERM FINANCING AND COST OF CAPITAL

3.1. Characteristics of the main sources of long-term financing

3.2. Main Financial Instruments of the Capital Markets

3.3. Capital structure policy and its main determinants

3.4. Risk, profitability, and opportunity cost of capital: the CAPM and the dividend models

3.5. Determination of WACC

4. DISTRIBUTION TO SHAREHOLDERS

4.1. Different forms of distribution of results: dividends and repurchases

4.2. Key determinants of the distribution policy

5. MERGERS AND ACQUISITIONS: AN INTRODUCTION

6. SHORT_TERM FINANCIAL DECISIONS

6.1. Basic principles of treasury management

6.2. Working Capital Management

6.3. Characteristics of major short-term financial investments

6.4. Characteristics of the main sources of short-term financing

NAO

BASIC

1. Benzinho, J. (2015). Os objetivos da empresa e da gestão financeira. O comportamento dos investidores e gestores. O governo da empresa. ResearchGate. (https://www.researchgate.net/publication/285523162_Objetivos_da_empresa_comportamento_dos_investidores_e_gestores_governo_societario_e_decisoes_financeiras)
2. Benzinho, J. (2016). A distribuição de riqueza pelos proprietários da empresa. ResearchGate. (https://www.researchgate.net/publication/303313293_A_distribuicao_de_riqueza_pelos_proprietarios_da_empresa)
3. Brealey, R., Myers, S. & Allen, F. (2019). Principles of corporate finance (13th ed.). McGraw-Hill Education.
4. Martins, A. et al (2016), Manual de Gestão Financeira Empresarial, 2ª edição, Escolar Editora.
5. Ross, S. A & al. (2018). Corporate finance (12th ed.). McGraw-Hill Education.
6. Silva, Armando; Silva, Sónia, 2019, Finanças Empresariais, Chiado Books.
7. Vieito, J. P., Maquiera, C. P. (2013). Finanças Empresariais – Teoria e Prática, 2ª edição. Escolar Editora.

Complementary

1. Hawawini, G. and Viallet, C. (2018). Finance for Executives – Managing for Value Creation, 6th edition. South‑Western Cengage Learning.
2. Hill, N.C., Sartoris, W.L. (1994). Short-Term Financial Management, 3rd edition. Prentice-Hall.
3. Hillier, David, S. Ross, R. Westerfield, J. Jaffe, B. Jordan (2016). Corporate Finance (European Edition), 3th edition. Mcgraw-Hill.
4. Vernimmen, P., Quiry, Pascal, Dallocchio, Maurizio, Le Fur, Y., Salvi, A. (2014). Corporate Finance – Theory and Practice, 4th edition. John Wiley & Sons.