This course is part of the Financial Management Specialization

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Financial Management SpecializationUniversity of Illinois at Urbana-Champaign

About this Course

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In this course you will learn how companies decide on how much debt to take, and whether to raise capital from markets or from banks. You will also learn how to measure and manage credit risk and how to deal with financial distress. You will discuss the mechanics of dividends and share repurchases, and how to choose the best way to return cash to investors. You will also learn how to use derivatives and liquidity management to offset specific sources of financial risk, including currency risks. Finally, You will learn how companies finance merger and acquisition decisions, including leveraged buyouts, and how to incorporate large changes in leverage in standard valuation models.
Upon successful completion of this course, you will be able to:

•	Understand how companies make financing, payout and risk management decisions that create value
•	Measure the effects of leverage on profitability, risk, and valuation
•	Manage credit risk and financial distress using appropriate financial tools
•	Understand the links between payout policies and company performance
•	Use derivatives and liquidity management to offset financial risks
•	Pick an appropriate financing package for an M&A or leveraged buyout deal

This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.

Flexible deadlines

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Shareable Certificate

Earn a Certificate upon completion

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Coursera Labs

Includes hands on learning projects.

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Course 6 of 7 in the

Financial Management Specialization

Approx. 19 hours to complete

English

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Skills you will gain

Risk Management
Corporate Finance
Mergers And Acquisitions (M&A)
Debt

Flexible deadlines

Reset deadlines in accordance to your schedule.

Shareable Certificate

Earn a Certificate upon completion

100% online

Start instantly and learn at your own schedule.

Coursera Labs

Includes hands on learning projects.

Learn more about Coursera Labs

Course 6 of 7 in the

Financial Management Specialization

Approx. 19 hours to complete

English

Could your company benefit from training employees on in-demand skills?

Try Coursera for Business

Instructors

Instructor rating

4.74/5 (103 Ratings)

Heitor Almeida

Professor of Finance, Stanley C. and Joan J. Golder Chair in Corporate Finance

Department of Finance, College of Business

74,358 Learners

5 Courses

Stefan Zeume

Assistant Professor of Finance

Gies College of Business

51,048 Learners

2 Courses

Offered by

University of Illinois at Urbana-Champaign

Get a head start on your degree

This course is part of the Master of Business Administration (iMBA) from University of Illinois at Urbana-Champaign. If you are admitted to the full program, your coursework will count towards your degree learning and all of your progress will transfer with you.

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Syllabus - What you will learn from this course

Content Rating96%(2,333 ratings)

Week1

Week 1

2 hours to complete

Course Orientation

2 hours to complete

4 videos (Total 14 min), 5 readings, 1 quiz

3 hours to complete

Module 1: Raising Financing: The Capital Structure Decision

In Module 1, we will discuss the differences between debt and equity financing for corporations. We will then learn how to avoid usual mistakes that people make when analyzing the choice between debt and equity. We will work with financial statements to understand the impact of higher debt on corporate profits, and we will learn how debt and risk are fundamentally related. Finally, we will use our knowledge to understand how companies choose how much debt to have.

3 hours to complete

11 videos (Total 92 min), 2 readings, 3 quizzes

11 videos

Objectives and Overview5mMechanics of Debt and Equity Issuance11mShould a Company Issue Debt or Equity?9mTwo Misconceptions - Part 17mTwo Misconceptions - Part 210mEvidence From the Field: Which Type of Capital Do Firms Prefer?9mThe Effect of Leverage On Taxes and Profits8mLeverage and Personal Taxes8mLeverage and the Risk of Financial Distress9mThe Trade-off Theory of Capital Structure7m1-11: Module 1 Review3m

2 readings

Module 1 Overview10mModule 1 Readings10m

3 practice exercises

Practice Quiz 130mPractice Quiz 230mRaising Financing: The Capital Structure Decision Graded Quiz30m

Week2

Week 2

6 hours to complete

Module 2: Understanding Debt Financing and Payout Policy

In Module 2 we will dig deeper into the mechanics and the institutional details that are important to understand debt financing. We will learn models that allow us to link default probabilities to yields on a company’s debt. We will discuss the roles of credit ratings for debt markets and for companies. We will learn the importance of non-price contractual terms such as debt covenants, collateral, and seniority. We will use this knowledge to understand how companies choose between bank debt and bond financing. Finally, we will discuss how payout decisions (dividends and share repurchases) affect firm value and how companies choose their optimal payout policy.

6 hours to complete

10 videos (Total 104 min), 2 readings, 5 quizzes

10 videos

Objectives and Overview4mBonds16mCredit Rating16mThe Many Different Types of Debt8mBank or Market Financing?13mDo Dividends and Share Repurchases Affect Firm Value?9mMain Factors Driving Payout Decisions8mDividends or Repurchases?11mModule 2 Review4mHonors Assignment 1 Solution12m

2 readings

Module 2 Overview10mModule 2 Readings10m

4 practice exercises

Practice Quiz 130mPractice Quiz 230mPractice Quiz 330mUnderstanding Debt Financing and Payout Policy Graded Quiz30m

Week3

Week 3

3 hours to complete

Module 3: Risk Management

In Module 3 we will identify good and bad reasons why companies engage in risk management, or hedging. We will learn the mechanics of how to use derivatives such as forwards and futures to eliminate specific risks. We will also discuss how to manage risks that cannot be hedged with derivatives. In particular, we will learn that appropriate liquidity management can work as a substitute for hedging strategies. We will also discuss how and why to hedge currency risk, and how to think about a company’s cost of capital when making cross-border investments.

3 hours to complete

11 videos (Total 96 min), 2 readings, 3 quizzes

11 videos

Objectives and Overview3mGood and Bad Reasons to Hedge9mForward Contract6mFutures Contracts9mHedge Ratios and Imperfect Hedging7mLiquidity as a Substitute for Hedging12mBilateral Contracts9mOperational Hedging10mCurrency Risk and the Cost of Capital13mAdjusting the Cost of Capital for International Projects11m3-11 Module 3 Review3m

2 readings

Module 3 Overview10mModule 3 Readings10m

3 practice exercises

Practice Quiz 130mPractice Quiz 230mRisk Management Graded Quiz30m

Week4

Week 4

5 hours to complete

Module 4: Finance, Governance, and Society

In Module 4, we will apply our knowledge on how to discount future cash flows to challenging situations. First, we learn how the presence of debt can result in acceptance of negative NPV projects (overinvestment, excessive risk taking). Then, we learn how debt can result in the rejection of positive NPV projects (underinvestment). Next, we will learn that NPV of the firm can differ from NPV for society, and how this may explain firms’ decisions to make bribe payments even though corruption is detrimental to welfare. Last, we examine situations where the NPV equation does not hold and what this means for society.

5 hours to complete

9 videos (Total 76 min), 2 readings, 4 quizzes

9 videos

Objectives and Overview5mThe Agency Cost of Debt5mExcessive Risk Taking8mUnder Investment7mFinance & Society: Corruption11mViolations of the Law of One Price10mModule 4 Review5mHonors Assignment 2 Solutions - Questions 1-49mHonors Assignment 2 Solutions - Questions 5-611m

2 readings

Module 4 Overview10mModule 4 Readings10m

3 practice exercises

Module 4 Practice Quiz 130mModule 4 Practice Quiz 230mFinance, Governance, and Society Graded Quiz1h

29 minutes to complete

Course Conclusion

29 minutes to complete

2 videos (Total 9 min), 2 readings

Reviews

4.8

158 reviews

5 stars
85.36%
4 stars
12.56%
3 stars
0.85%
2 stars
0.48%
1 star
0.73%

TOP REVIEWS FROM CORPORATE FINANCE II: FINANCING INVESTMENTS AND MANAGING RISK

by JCDec 29, 2019

Though the module 4 is a tough one, I find it comprensive enough in making a good financial decision particularly in understanding the LBO and the M&A. Such learning is very important.

by SXDec 6, 2018

Fantastic Value Adding Course. Very Practical with a lot of good examples. Excellent conceptual breadth and depth also in this course. Highly recommended.

by DSSep 10, 2018

each topic is nicely explained, real life examples are very fruitful.

voice is low during interview, but it was very fruitful and have learnt a-lot.

by AAJan 11, 2020

Excellent course that gives excellent knowledge and directions to move in the industry.

Professor makes materials easy understandable and gives his advice, that can be implemented in the future.

View all reviews

About the Financial Management Specialization

This Specialization covers the fundamentals of strategic financial management, including financial accounting, investments, and corporate finance. You will learn to evaluate major strategic corporate and investment decisions and to understand capital markets and institutions from a financial perspective, and you will develop an integrated framework for value-based financial management and individual financial decision-making.

The Financial Management Specialization is part of the University of Illinois iMBA Program. Each course in this Specialization also fulfills a portion of the requirements for a University of Illinois course that can earn you college credit. When you complete the Financial Management Specialization, you will: · Have a solid foundation in developing an integrated framework for strategic financial decision-making. · Have a thorough understanding of financial statements and the financial information they provide, and be able to critically evaluate and analyze cash flows statements. · Understand the management and evaluation of portfolios and firm valuation techniques. · Understand how to incorporate risk and uncertainty into investment decisions and understand how companies make financing and investment decisions.

Frequently Asked Questions

When will I have access to the lectures and assignments?
Access to lectures and assignments depends on your type of enrollment. If you take a course in audit mode, you will be able to see most course materials for free. To access graded assignments and to earn a Certificate, you will need to purchase the Certificate experience, during or after your audit. If you don't see the audit option:
The course may not offer an audit option. You can try a Free Trial instead, or apply for Financial Aid.
The course may offer 'Full Course, No Certificate' instead. This option lets you see all course materials, submit required assessments, and get a final grade. This also means that you will not be able to purchase a Certificate experience.
What will I get if I subscribe to this Specialization?
When you enroll in the course, you get access to all of the courses in the Specialization, and you earn a certificate when you complete the work. Your electronic Certificate will be added to your Accomplishments page - from there, you can print your Certificate or add it to your LinkedIn profile. If you only want to read and view the course content, you can audit the course for free.
Is financial aid available?
Yes. In select learning programs, you can apply for financial aid or a scholarship if you can’t afford the enrollment fee. If fin aid or scholarship is available for your learning program selection, you’ll find a link to apply on the description page.

More questions? Visit the Learner Help Center.

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