FIN 541: Corporate Finance I – Case Study (Capital Structure, Cost of Capital and Valuation)

Corporate Finance studies how corporations finance their operations. The emphasis of this part of the curriculum is on shareholder value and company valuation. The focus of the course will be on solving several case studies in groups of up to three students. Each of these cases has to be handed in and will contribute to the final grade. The hands-on format of this course ensures that students are able to transfer the theoretical concepts encountered in the lecture (FIN 540) to real world problems.

Learning outcomes
After completing this course, students will be able to value companies using state-of-the-art tools such as DCF, Residual Income, EVA, and Multiples. In particular, participants will be able to determine the cost of capital for corporations and projects using real world data. Participants will be able to identify value drivers by applying financial ratio analysis and analyse the impact of those value drivers on the firm value. Students will also be able to perform event studies in order to analyse how capital markets react to important corporate events like merger announcements or earnings announcements. Students will be able to implement the theoretical concepts discussed in the lecture (FIN 540) using Microsoft Excel.

Necessary prerequisites
FIN 540 Corporate Finance I (Parallel attendance possible)

Recommended prerequisites
Every student participating in this course should have completed the equivalent of the 2-semester finance module, which is part of the Mannheim Bachelor program. The lectures generally assume basic knowledge in accounting (balance sheets, income statements, financial ratios), finance (present value methods, portfolio theory, CAPM), mathematics (calculus, optimization) and statistics (mean, variance, standard deviation, univariate and multivariate regressions). The course assumes that students already manage the material in Brealey, Myers, Allen, Corporate Finance, (McGraw-Hill, 10th edition, 2010), chapters 1–19.

Forms of teaching and learningContact hoursIndependent study time
Case Study Presentation1 SWS9 SWS
Exercise class1 SWS4 SWS
ECTS credits5
Graded yes
Form of assessmentCase write-ups (75%), class participation in case discussions (25%)
Restricted admissionyes
Further information
Prof. Ernst Maug, Ph.D.
Frequency of offeringFall semester
Duration of module 1 semester
Range of applicationM.Sc. MMM, M.Sc. Bus. Edu., M.Sc. Econ., M.Sc. Bus. Inf., M.Sc. Bus. Math.
Preliminary course work
Program-specific Competency GoalsCG 1
LiteratureCases copyrights. The list of cases will be published at the beginning of the term.
Course outlineThe course follows the case study teaching method. For each case study, the students are presented with a case detailing some real-life valuation situation. They need to provide a group write-up answering several questions related to the case and they need to participate in a class discussion regarding the case. Class participation is mandatory.