1. Overview of Finance 520

2. Financial Analysis, Planning, and Control
Three Areas of Focus
Focus
Areas
Financial Analysis, Planning, and Control 1
Investment Decision 2
Capital Structure 3
Main Questions
How is the firm doing today, and how does the firm’s future look?
Which investments should be made?
How are the assets and operations going to be financed?

3. Financial Analysis, Planning, and Control Topics
Ratios (trends, industry averages)
Leverage
Liquidity
Profitability
Activity
Value
Growth
Du Pont System
Planning:
Pro forma statements
Cash Budgets
Breakeven Analysis
Capital Budgeting
Control (require reporting):
Standard Costs
Variances
Capital Budget
Cash Controls
Information Resources
Slide Presentations
Chapter
Sections
Statement of Cash Flows
Ratios
Long-Term Planning
Short-Term Planning-
Break Even and Leverage
Working Capital and Current
Assets
Working Capital and Short-
Term Liabilities
2, 3
3.3 4
19.3 ,
19.2
19.5

4. Information Resources
Investment Decision
Tools
Time value of money
Paper Assets
Bond
Preferred and Common Stock
Capital Budgeting (Tangible Assets)
Cost of Capital
Weighted Average Cost of Capital
(WACC)
CAPM
Information Resources
Slide Presentations
Chapter
Sections
Time Value of Money, NPV, and
IRR
Valuing Tangible Assets: Capital
Budgeting
Valuing Paper Assets: Stocks and
Bonds
Capital Asset Pricing Model
Stock Market Investing in the 21st Century: Four Important Lessons
5, 6, 10
7, 8 15 13

5. Information Resources
Capital Structure
Debt vs. Equity
Operating and Financial Leverage
FRICTO Analysis
Range of Earnings Chart
Dividend Policy
Investment Opportunities
Marginal Cost of Capital
Clientele Expectations
Signals
Cash Position
Leasing
Operating, Financial, Sale Lease
Back, etc.
Information Resources
Slide Presentations
Chapter
Sections
Costs and Benefits of Debt:
Capital Structure
Raising Capital
(Guest Presentations) 17 16 26