Fundamentals of Corporate Finance

What is Corporate Finance?
Corporate finance deals with the capital structure of a corporation, including its funding and the actions that management takes to increase the value of the company. Corporate finance also includes the tools and analysis utilized to prioritize and distribute financial resources.
The ultimate purpose of corporate finance is to maximize the value of a business through planning and implementation of resources while balancing risk and profitability...

Corporate Finance Fundamentals Course

By Corporate Finance Institute / CFI

Introduction to Corporate Finance

Financial Management/Corporate Finance
By Deric Business Center

Financial Ratios
By Deric Business Center

Financial Ratios Analysis

Top 4 Financial Statement Analysis Examples

Sample Reports 1

Sample Reports 2

Time Value Money for Capital Budgeting
By Professor Farhat

Calculate Bond issue Price.
By Professor Farhat

Introduction to bonds payable
By Professor Farhat

Stock Valuation
By Professor Farhat

Intrinsic Value of Stocks
By Professor Farhat

Weighted Average Cost of Capital
By Professor Farhat

Capital Asset Pricing Model (CAPM) Explained

How to pass BEC CPA Exam

Price to Earnings Ratio
By Professor Farhat

Interest Rates and Bond Valuation
By Luke McElfresh

Recommended Text Books/References

Fundamentals of Corporate Finance

By 11th Ed. Ross Westerfield Jordan

Corporate Finance Terms

Chapter 1: Introduction to Finance

Chapter 2: Financial Statement, Taxes and Cash Flow

Chapter 3: Working on Financial Statements

Chapter 4: Long-Term Financial Planning and Growth

Introduction

Forms of Business Organization

Agency Problem

Effective Annual Rate & Annual Percentage Rate

Balance Sheet

The Income Statement

Corporate Tax

Cash Flow

Cash Flow Analysis

Common Size Financial Statements

Financial Ratio Analysis

DuPont Analysis

Financial Planning Models - A First Look

The Percentage of Sales Approach

External Financing Needed

Chapter 5: Introduction To Valuation - Time Value Money

Chapter 6: Discounted Cash Flow Valuation

Chapter 7: Interest Rates And Bonds Valuation

Chapter 8 : Stock Valuation

Time Value Money

Time Valu Money: Present Value

Future Value with Multiple Cash Flows

Present Value with Multiple Cash Flows

Present Value of Annuities

Perpetuities & Growing Annuities

Loan Amortization

Bonds And Bonds Valuation

More About Bond Features

Bond Ratings

Some Different Types of Bonds

Effective Annual Rate & Annual Percentage Rate

Bond Markets

Common Stock Valuation - Zero Growth

Common Stock Valuation - Constant Growth

Common Stock Valuation - Nonconstant Growth

Components of Required Rate of Return

Stock Valuation Using Multiples

Chapter 9: Net Present Value and Other Investment Criteria

Chapter 10: Making Capital Investment Decisions

Chapter 11: Project Analysis and Evaluation

Chapter 12: Some Lessons From Capital Market History

Net Present Value

The Payback Rule

The Discounted Payback

The Average Accounting Return

Profitability Index

Project Cash Flows: A First Look

Pro Forma Financial Statements & Cash Flows

Internal Rate of Return / IRR

Net Working Capital

Depreciation & Cash Flow Effect

Alternative Definitions of Operating Cash Flow

Cost-Cutting Proposal Using Discounted Cash Flow

Setting Bid Price Using Discounted Cash Flow

NPV and What-If Analysis

Break-Even Analysis

Operating Cash Flow, Sales Volume & Break-Even

Calculate Percentage Return & Dollar Return

Risk Premium for Stocks | Corporate Finance

Variability of Stock Return Standard Deviation

Chapter 13: Return, Risk and the Security Market Value

Chapter 14: Cost of Capital

Chapter 15: Raising Capital

Chapter 16: Financial Leverage & Capital Structure Strategy

Expected Market Return

Expected Return of Portfolio

Portfolio Variance

The Cost of Equity

The Cost of Equity Using Security Market Line

The Cost of Debt & Cost of Preferred Stock

Weighted Average Cost of Capital WACC

Presented By Jerry Heikal

Presented By Jerry Heikal

Chapter 17: Financial Leverage & Capital Structure Strategy

Chapter 18: Short Term Finance and Planning

Chapter 19: Cash and Liquidity Management

Chapter 20: Credit and Inventory Management

Presented By Jerry Heikal

Presented By Jerry Heikal

Presented By Jerry Heikal

Presented By Jerry Heikal

Chapter 21: International Corporate Finance

Chapter 22: Behavioral Finance

Chapter 23: Risk Management

Chapter 24: Options and Corporate Finance

Presented By Jerry Heikal

Presented By Jerry Heikal

Presented By Jerry Heikal

Presented By Jerry Heikal

Chapter 25: Option Valuation

Chapter 26: Merger and Equisition

Chapter 27: Leasing

Presented By Jerry Heikal

Presented By Jerry Heikal

Presented By Jerry Heikal

Fundamentals of Corporate Finance

By: 4th Ed. Berk/DeMarzo

Corporate Finance Terms

Chapter 1 - The Corporation

Presented By Kunal Cholera

Chapter 2: Financial Statement Analysis

Presented By Kunal Cholera

Chapter 3 - Financial Decision making

Presented By Kunal Cholera

Chapter 6 - Introduction to BONDS

Presented By Kunal Cholera

Chapter 10 - Capital Markets and the Pricing of Risk

Presented By Kunal Cholera

Chapter 11: Optimal Portfolio Choice and the Capital Asset Pricing Model

Presented By Kunal Cholera

Chapter 12 - Cost of Equity capital & cost of debt capital

Presented By Kunal Cholera

Chapter 13: Investor behavior and capital market efficiency

Presented By Kunal Cholera

Renting vs. Buying a Home: NPV rule

Presented By Kunal Cholera

Corporate Finance / Stock Valuation

Intrinsic Value of a Stock: What It Is and Formulas to Calculate It

Intrinsic Value

The price a rational investor is willing to pay for an investment, given its level of risk

Corporate Finance Knowledge Panel

Intrinsic value is a philosophical concept wherein the worth of an object or endeavor is derived in and of itself—or, in layman's terms, independently of other extraneous factors. Financial analysts build models to estimate what they consider to be the intrinsic value of a company's stock outside of what its perceived market price may be on any given day. The discrepancy between market price and an analyst's estimated intrinsic value becomes a measure of investing opportunity. Those who consider such models to be reasonably good estimations of intrinsic value and who would take investing action based on those estimations are known as value investors...

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This chapter explores the general model as well as specific versions of it tailored for different assumptions about future growth. It also examines issues in using the dividend discount model and the results of studies that have looked at its efficacy.

What is Intrinsic Value? The intrinsic value of a business (or any investment security) is the present value of all expected future cash flows, discounted at the appropriate discount rate. Unlike relative forms of valuation that look at comparable companies, intrinsic valuation looks only at the inherent value of a business on its own.
Another way to define intrinsic value is simply, “The price a rational investor is willing to pay for an investment, given its level of risk.”

Example
3M company stock analysis:
Using - Dividend Discount Model
3M is a large company and steady business with a 4.14% dividend rate and a stock price of $143.93 per share. Its stock currently pays a $1.49 quarterly dividend. The current bond yield to maturity for 3M is 6.375%, with a five-year average of increasing dividends by 0.64%. That’s all we need to estimate the future stock price.
Let’s plug the numbers into the formula:
Stock Price,
= Expected dividend per share / ( Cost of capital – Dividend growth rate)
= (1.49 (quarterly dividend) x 4 (number of quarters) x 1.0064 (annual growth rate) / (6.375% – 0.64%)
= $5.998 / 0.05735
So, 3M Stock Price = $104.59
As you can see with the math above, the estimated value of a share of 3M, based solely on dividends, is $104.59. Compared to the $143.93 stock price, we would say that 3M is overvalued and not currently a good buy.

Dividend Discount Models

When figuring out a stock's intrinsic value, cash is king. Many models calculate the fundamental value of a security factor in variables largely pertaining to cash (e.g., dividends and future cash flows) and utilize the time value of money (TVM). One popular model for finding a company's intrinsic value is the dividend discount model (DDM)...

Question/Solution 1

Question/Solution 2

Residual Income Models

The key feature of this formula lies in how its valuation method derives the value of the stock based on the difference in earnings per share and per-share book value (in this case, the security's residual income) to arrive at the intrinsic value of the stock...

Question/Solution 1

Question/Solution 2

Discounted Cash Flow Models

Finally, the most common valuation method used to find a stock's fundamental value is the discounted cash flow (DCF) analysis.
Using DCF analysis, you can determine a fair value for a stock based on projected future cash flows. Unlike the previous two models, DCF analysis looks for free cash flows...

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Dividends play a pivotal role in the world of stock valuation. They represent a portion of a company's earnings that is distributed to its shareholders.