This class exists in these courses :
• IÉSEG > IESEG Degree - Programme Grande École > Semester 2 > 2,00 ECTS

Prerequisites

Knowledge of present value and future value, risk assessment and measurement, basic familiarity with balance sheets and income statements. Typically a student taking this course will have previously taken introductory level courses in financial accounting, managerial finance and statistics.

Learning outcomes

At the end of the course, the student should be able to:
*Analyze the effects of working capital policies on equity value and default risk
*Design asset-specific working capital policies (cash, inventory, etc), given the characteristics of the industry and firm
*Determine the best ways to raise and invest short-term funds
*Design an overall optimal working capital management policy for the firm

Course description

This course examines the various components of working capital (cash, receivables, payables, inventory), how they interact with one another, and how they affect (i) firm liquidity and default risk, and (ii) shareholder wealth. The course will build on the principles of financial management that students will have learned in earlier courses, and will apply the principles and concepts of financial theory to problems and decisions associated with short-term (working) capital. The course will focus on using working capital optimally, so that funds are not tied up in unproductive assets and, at the same time, the risk of illiquidity (and related default risk) does not exceed desired limits. The ultimate objective, as always, is to maximize shareholder wealth. This course includes both theoretical and applied components. Practical applications are useful, but cannot be studied fruitfully without a sound knowledge of the underlying theory. Hence there will be some emphasis on the theory. Numerical examples will be very important in illustrating the concepts and applications to be covered in this course. The course should be of interest to students planning careers in corporate finance and financial management.

Class type

Class structure

Teaching methods

• Case study
• E-learning
• Interactive class
• Presentation
• Project work
• Research

Assessment

Recommended reading

• Short-Term Financial Management, 5th Edition, John T. Zietlow, Matthew Hill and Terry S. Maness. Cognella Academic Publishing, 2017, ISBN 978-1-5165-0822-8 -

• A course package will be provided to students. - -

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