CFA Level 1 - Corporate Finance

Description

Hi

This is a Corporate Finance Course for CFA Level 1 Exam. It covers topics related to Corporate Finance in detail. The course consists of video lectures along with solved illustrations and Quiz that provides better understanding of concept. It is logically divided into various Modules and sections. Following are details of the same :

Module 1 : Introduction

(Includes Section 1)

Introduction and understanding the meaning of financial management.

Module 2 : Cost of Capital

(From Section 2 to Section 5 )

Here we will learn how to calculate cost of capital for individual capitals i.e Cost of Debentures/ Bonds, Cost of Preference shares , Cost of Equity shares and then How to calculate total cost of capital.

Cost of debt/Bonds and debentures includes calculation of Cost of Redeemable and Irredeemable debts using approximation method and Internal Rate of Return (IRR) Method. It also includes separate lecture wherein logic for using current price in calculating cost of capital is explained.

Cost of Preference shares using Approximation method and Internal Rate of Return (IRR Method)

Cost of Equity and Retained Earnings using Dividend Price Model, Earnings Approach model, Gordon's growth model, Realized Yield Approach, Capital Asset Price Model is explained along with examples. Besides Calculation of Growth Rate for Gordon's growth model, Beta , Types of Risks - Systematic and Unsystematic risks are explained in separate video lecture along with examples.

This section is concluded by calculating weighted average cost of capital (WACC) and Marginal cost of capital.

Module 3 : Leverages

(From Section 6 to Section 9)

Here we will be learning about different types of Leverages - Operational Leverage, Financial Leverage and Combined Leverage. This will be followed by Formula to calculate degree of operating leverage (DOOL/DOL), degree of Financial leverage (DOFL/DFL) and degree of combined leverage (DOCL/DCL). Operating and Financial break even points are analyzed in separate lectures and relationship of break even points with leverage is discussed. Some other topics include relationship between Margin of Safety and Operational leverage, Relationship between Break even point - Fixed cost and operational leverage, Why financial leverage is known as trading on equity and double edge sword.

Module 4 : Capital Budgeting

(From Section  10 to Section 25)

It begins meaning of Capital Budgeting and purpose of Capital Budgeting. This is followed by process of capital budgeting and types of Capital budgeting decisions - Replacement and Modernization decisions, Expansion decisions, Diversification decisions, Mutually Exclusive decisions, Accept or Reject decision, Contingent decision.

Other terms such as incremental cashflows, Tax Benefit on Depreciation, Opportunity cost and Sunk cost, Working capital costs, allocated overhead costs are also explained in separate tutorials along with illustrations. This is followed by types of cashflows for new project and replacement project along with basic principles of calculating cashflows.

All Capital Budgeting Techniques i.e Payback Period Method, Payback Reciprocal Method, Accounting Rate of Return (ARR) Method, Discounted Payback period method, Profitability Index method (PI) , Net Present Value Method (NPV) , Internal Rate of Return Method (IRR) and Modified Internal Rate of Return (MIRR) are discussed in detail along with meaning , Illustrations , advantages and disadvantages. Reinvestment assumptions and anomalies in Net Present Value Method (NPV) and Internal Rate of Return Method (IRR) method along with reasons and examples are discussed separately.

Capital Rationing Meaning and Capital Rationing for Divisible and Indivisible projects is discussed along with solved illustrations.

Methods to analyze Mutually exclusive projects with different tenures - i.e Replacement chain Method and Equivalent annualized criterion method are also included along with solved examples.

Module 5 : Working Capital Management

(From Section 26  to Section 33 )

This module begins with meaning significance and types of working capital.

The other sections includes following topics :

• Optimum working capital

• Operating Cycle and Working Capital Cycle - Meaning, Concept and Calculation along with comprehensive solved example

• Estimation of Working Capital in detail that includes estimation of each and every component of working capital along with solved illustration.

• Working Capital on Cash cost basis- Meaning, Concept and Calculation along with comprehensive solved example

• Impact of Double Shift on Working Capital - Meaning, Concept and Calculation along with comprehensive solved example

Module 6 : Treasury and Cash Management

(From Section 34 to Section  38    )

It begins with meaning of Cash management along with functions of Treasury and Cash Management. It is followed by preparing of Cash Budgets - Both for long term and Short term along with solved illustrations.

Further it is followed by Cash Management Models and Theories. It includes William J Baumol's EOQ Model and Miller Orr Cash Management model.

It ends with lectures on recent developments in Cash Management Systems and Management of Marketable securities.

Module 7 : Inventory Management

(Section 39 )

This includes various topics related to Inventory management such as Reorder Level, Reorder Quantity, Minimum stock level, average stock level , Maximum stock level, Danger level and buffer stock along with solved illustration on inventory management.

Module 8 : Management of Receivables and Payables

(From Section 40 to Section 44 )

This module includes following topics :

• Management of Debtors - Meaning and Objectives

• Credit Policy - Meaning and Factors affecting credit policy

• Approaches to evaluation of Credit policies along with the solved illustrations- Evaluation of Credit policies on Total Approach and Evaluation of Credit policies on Incremental Approach.

• Financing receivables

• Factoring services

• Forfaiting

• Innovations in receivables management

• Monitoring of receivables

• Management of Payables

• Cost of Payables - Calculation along with solved illustration

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