This version: 7/16/2015

College of Business Administration
Loyola Marymount University

MBAF 614: Financial Analysis & Strategy
Fall 2015
Instructor: Dr. David Offenberg
Office: Hilton 313
Phone: (310) 338-2903
E-mail: doffenberg@lmu.edu

Office Hours:
Tuesday, 4:00 – 6:00 p.m.
(or by appointment)

Class time: Tuesday, 7:15 - 10:00 p.m. (HIL 023)

Course Overview:
The purpose of this course is to study the impact of corporate financial strategy on shareholder wealth. In essence, this course covers the fundamentals of MBAA 608 with a lot more depth.
Throughout the semester, we will examine real situations that were faced by real chief financial officers. In the end, you should have a much better appreciation for the role of the CFO in keeping the corporation afloat.
Method:
This course is taught via case studies supported by lectures. Class sessions begin with a studentled analysis of the assigned case. The remainder of the class period will be dedicated to further analysis of the case. Students have substantial responsibility (and incentives) for coming to class prepared to engage in active discussion. Each student is expected to work in a team to analyze the cases.
Readings:
The textbook for the course is: Case Problems in Finance, by Kester, Ruback and
Tufano, Twelfth Edition, Publisher: McGraw Hill- Irwin. The bookstore will not carry the book so you must order it online.
The MBAA 608 textbook is also a useful reference, but not required (Brigham and
Ehrhardt, Financial Management: Theory and Practice). Alternatively, you may use books authored by Brealey & Myers or Ross, Westerfield, & Jaffe; especially older editions that you can find used.
Communication:
Course materials will be posted on MyLMU Connect (formerly Blackboard). It is the responsibility of the student to ensure that he/she has access. Students must reliably receive messages sent their LMU e-mail account. If necessary, forward your LMU email to another account. Students are also required to Connect with the professor on LinkedIn.com by classtime on Tuesday, September 8, 2015.

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Policies:
Groups: Most of the work in this course is to be done in groups. Before the end of the firstclass session, you will be asked to form a group of no more than three. There must be five groups total in the class, so some groups will have two members and some groups three. Once you have joined a group, you must remain in it throughout the semester. Your group will have to meet at least once a week, so make sure that you can schedule a weekly meeting time with your teammates before you submit your group roster.
Enrollment: Due to changes in the course’s enrollment, the number of groups, presentations, and course memos due may change. Students will be advised of such changes and the syllabus will be revised.
Name cards: By the second class, you are asked to have a name card that will rest on the front of the desk and be easily readable from the front of the classroom. This name card must show your first and last name. The exact dimensions, choice of material, and means of affixing the name card each week are left to your discretion.
Seating: There is no set seating chart for this class. You are free to sit wherever you want.
However, please do not sit in the back two rows.
Electronics: Please turn off all audible ringers on phones, pagers, and laptops before class begins.
Academic Honesty: Academic dishonesty will be treated as an extremely serious matter, with serious consequences that can range from receiving no credit for assignments/tests to expulsion.
It is never permissible to turn in any work that has been copied from another student or copied from a source (including Internet) without properly acknowledging the source. It is your responsibility to make sure that your work meets the standard of academic honesty set forth in the “LMU Honor Code and Process” which appears in the LMU Bulletin 2012-2013 (see http://www.lmu.edu/about/services/registrar/Bulletin/Bulletins_in_PDF_Format.htm.) Observation: It is a practice in the College for faculty members to observe classes taught by other faculty. From time to time, therefore, faculty from our College or even from other colleges may attend classes.
Tentative Nature of the Syllabus: If necessary, this syllabus and its contents are subject to revision; students are responsible for any changes or modifications distributed in class or posted on LMU's course management system MYLMU Connect
Americans with Disabilities Act: Students with special needs as addressed by the Americans with Disabilities Act who need reasonable modifications, special assistance, or accommodations in this course should promptly direct their request to the Disability Support Services Office. Any student who currently has a documented disability (physical, learning, or psychological) needing academic accommodations should contact the Disability Services Office (Daum Hall Room 224,
310-338-4535) as early in the semester as possible. All discussions will remain confidential.
Please visit http://www.lmu.edu/dss for additional information.

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Grading: Course grades are based on:
Case Presentations (5% each)
Case Memos (average of best 8)
Participation
Peer Evaluation
Final Exam

10%
20%
20%
10%
40%

The final course grades may be curved. In no case will a student do worse than a “straight grading scale” (i.e., >90%=A-, >80%=B-, etc.). Pluses and minuses for the letter grade are given based on the class curve for the final total points.
Case Memos:
Nine case memos are required. The objective in using case studies is to provide examples of companies or individuals that have faced the topic at hand and to apply theoretical tools to real problems. The memos should be written as though the reader is your client and your financial consulting firm is trying to solve their problem. Please note:
1. The case memos must be done in groups, with all group members receiving the same grade for the write-up.
2. The case memo will be a two-page (maximum) single spaced report. The two page maximum does not apply to exhibits such as graphs and tables, but please keep these to a minimum.
You may use as many exhibits as necessary but the exhibit must be referred to in your writeup. The case write-up should be in 12 point type with 1 inch margins.
3. The memo must begin with a one paragraph synopsis of your recommendation to your client.
The remainder of the memo should support your recommendation.
4. Case questions and/or guidance will be provided on Blackboard, and are designed to help you streamline the issues to be addressed. If you believe that these questions do not effectively address the problems in the case, feel free to go outside the parameters of the questions. 5. Please do not restate the facts of the case in your write-up. Assume that the facts are known by all parties involved and do not need to be restated.
6. Most importantly, you must take a position regarding the problem in the case and make specific recommendations on how to solve it. Support your recommendation as concisely and as effectively as you can.
7. All exhibits should be of the quality that you would present to a client. The client should be able to understand the exhibit without reading the memo. Therefore, all exhibits should have clear labels on all values and demonstrate all calculations.
8. You will have the opportunity to write a memo for ten cases over the course of the semester, but you are only required to turn in eight memos. It is up to you which two you do not turn in. This version: 7/16/2015

Case Presentations:
Each group will be responsible for two case presentations of approximately 15 minutes.
Note that the group presenting the week’s case does not turn in a case memo. Every member of the group must present a part of the team’s analysis.
Each week, a group of students will prepare a team presentation. The presentation should be delivered as though the class is your client and your financial consulting firm is trying to solve their problem. There are three basic components that should be discussed: 1) the issue that needs to be resolved, 2) the relevant facts, 3) your team’s approach and recommendations. Following each presentation the discussion will then open to the whole class. Questions are encouraged both during and after the presentation. Ideally the class as a whole will interactively come to an understanding of the problems presented in the case.
Cases will be assigned to groups at random following the second class session. If you know that you will be unable to attend a class session because of a work-related obligation, please send me an e-mail immediately so that I can be sure not to assign your group to that case.
Class Participation:
It is important that everyone come prepared to "open the case" and to discuss in detail the problem and its potential resolution. Therefore, a portion of your grade will be based on your contribution to in-class discussions of the material. Each non-exam day, you will be given a participation score as follows:
0 – Did not attend class.
1 – Attended but did not participate.
2 – Participated.
3 – Participated in a significant way.
You will notice that I do not keep notes on participation during class. In order to score a 2 or a 3, you must contribute in such a way that I can remember you contribution to the discussion when I assign scores at the end of the night. These scores will be posted online, typically within 24 hours of class. Your class participation grade will be assigned based on the sum of your daily participation scores in relation to the rest of the class.
To ensure that everybody has an equal chance to participate, it is critical that you raise your hand and wait to be called upon when you would like to add to the discussion. Be advised that I am more likely to call upon students seated in the front and center of the classroom.

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----------------------------------------------------------------------------------------------------Daily Class Schedule
----------------------------------------------------------------------------------------------------Tuesday, September 1 - NPV
Case: Ocean Carriers (pg. 491)
Reference: Brigham and Ehrhardt, Chapters 10 & 11
Tuesday, September 8– CAPM
Case: Ameritrade (pg. 447)
Reference: Brigham and Ehrhardt, Chapters 4 & 5
Tuesday, September 15 – Cost of Capital
Case: Marriott Corporation (pg. 483)
Reference: Brigham and Ehrhardt, Chapter 9
Tuesday, September 22 – Financial Options
Case: Arley Merchandise Corporation (pg. 311)
Read: "Derivative Instruments and Risk Management" (p.277)
Reference: Brigham and Ehrhardt, Chapters 8 & 23
Tuesday, September 29– Real Options
Case: Arundel Partners: The Sequel Project (pg. 693)
Read: "Capital Projects as Real Options" (p.713)
Reference: Brigham and Ehrhardt, Chapter 12
Tuesday, October 6 – Preferred Stock, Warrants and Convertibles
Case: MCI (pg. 179)
Reference: Brigham and Ehrhardt, Chapter 21
Tuesday, October 13 – No class
Tuesday, October 20 – Working Capital Management
Case: Butler Lumber Company (pg. 21)
Read: "Note on Bank Loans" (p.25)
Reference: Brigham and Ehrhardt, Chapters 22 & 27 (pp.16-24)

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Tuesday, October 27 – Capital Structure
Case: The Loewen Group, Inc. (pg. 93)
Reference: Brigham and Ehrhardt, Chapters 16 & 17
Tuesday, November 3 – Capital Structure
Case: Diageo plc (pg. 129)
Reference: Brigham and Ehrhardt, Chapters 16 & 17
Tuesday, November 10 – Dividends vs. Repurchases
Case: Ford (pg. 243)
Reference: Brigham and Ehrhardt, Chapter 18
Tuesday, November 17 – IPO’s
Case: Eskimo Pie (pg. 589)
Reference: Brigham and Ehrhardt, Chapter 19
Tuesday, November 24 – TBD
Case: TBD (pg. ?)
Reference: Brigham and Ehrhardt, Chapter ?
No presentations or case memos due this week
Tuesday, December 1 – Leveraged Buyouts
Case: Seagate Technology (pg. 755)
Reference: Brigham and Ehrhardt, Chapter 25
Tuesday, December 8 - Review

Final Exam: Tuesday, December 15


The exam will be a case or similar problem. It will be distributed on December 8 and due on December 15 by 8:00 p.m.