Modulbeschreibungen

Specialisation Business Finance

Students acquire a theoretically well-founded and practice oriented overview of financial analysis and valuation. The module introduces different methods for estimating the „fair” company value. Students learn to differentiate methods and to apply them proper and critically. For this purpose, theoretical concepts will be critically assessed as well as advantages and shortcomings of each method emphasized. Additionally, students understand how to determine the appropriate discount rate in each case using an adequate method. 

Lecture including case studies

1.    Introduction to company valuation
•    Motives for company valuation;
•    Brief introduction to methods of company valuation (providing an overview);
•    Critical factors influencing the choice of an appropriate method
2.    Theoretical foundations of company valuation
•    Discount rate (practical estimation of CAPM betas as well as other methods, cost of equity (CAPM and multi-factor methods), cost of debt, WACC, opportunity cost of capital;
•    Methods of company valuation (asset value, liquidation value, earning-capacity value, mean value approach, multiples, discounted cash flow methods (Entity and equity approach), dividend discount method, sum of parts valuation, Economic Value Added (EVA))  
•    Comparison of advantages and shortcomings of different methods, role of taxes in company valuation.
•    Key ratios of company valuation (esp. earnings per share, price-earnings ratio (PE), price earnings growth ratio (PEG), cash-flow per share, dividend yield, market capitalization, book-market ratio) and cash flow ratios.
3.    Practical application of company valuation methods
•    Application to practical examples by students (research report, presentation as well as company analysis and valuation)
•    Case studies – presented by the lecturer

core

• Berk/DeMarzo: Corporate Finance, Pearson/Addison Wesley;


• Damodaran, Aswath: Investment Valuation, Tools and Techniques for Determining the Value of Any Asset


• Koller/Goedhart/Wessels: Valuation: Measuring and Managing the Value of Companies


• Ryan, B., Corporate Finance and Valuation, London.

additional

• Damodaran, Aswath: The Dark Side of Valuation: Valuing Young, Distressed, and Complex Businesses

- Introduction to Financial Accounting
- Introduction to Managerial Accounting
- Principles of Corporate Finance
- Finance and Investment Policies in Businesses

Lecture including case studies (4 SWS, contact time: 60 hrs, face-to-face, day and evening courses)

Content orinented learning outcomes

After successful completion of the module students are able to

• ILO 1: name situations that require a company valuation and state the basics of quantitative and qualitative company valuation


• ILO 2: select an appropriate valuation approach from a list of (quantitative) methods and to explain which methods are preferred in practice


• ILO 3: explain the different valuation methods from a theoretical perspective and critically assess advantages and shortcomings of the different methods,


• ILO 4: describe the role of taxes in company valuation and correctly include taxes in case studies


• ILO 5: examine the different approaches how to determine a discount factor and select an appropriate method for the respective application

Skills oriented learning outcomes

After successful completion of the module students are able to

• ILO 6: determine the company value using different methods, argue why results may differ for the same company and assess which value should be used in different situations (company analysis and valuation)


• ILO 7: assess how qualitative aspects (corporate social responsibilty, sustainability, ethical aspects and strategy) may influence a company value and investor decisions (research report)


• ILO 8: present the results orally for a large group (presentation)

Prerequisite for further modules of this specialisation, preparation for thesis, precondition for master program with finance focus.

Programs: Business Administration, IBAEX, DFS, Economics, IBMAN, Wirtschaftsrecht, Unternehmensgründung und -nachfolge.

Verification of competence acquisition:

The examination consists of two parts:

• Part 1 encompasses conducting, presenting and documenting a practical company analysis and valuation. Typically, the required elements are a written concept (description of methodology, interpretation of preliminary key ratios), the presentation of this concept in class and a company analysis and valuation in writing, which is handed in at the end of the semester. Part 1 contributes 25% to the total grade.  


• Part 2 is an exam (90 minutes) consisting of several problems. Part 2 contributes 75% to the total grade.

The two parts of the examination test different areas of knowledge and competence.

• Part 1 verifies the following ILOs
  
  
  
  • Ability to use theoretical concepts (content taught in class) for practical cases, prioritize information and work independently (ILO 2, ILO 3, ILO 6, ILO 7)
  
  
  • Ability to formulate hypotheses and answer (ILO 7, ILO 8)
  
  
  • Ability to critically assess relevant issues e.g. the relevance of soft factors like ethical aspects and corporate social responsibility in company valuation (ILO 7)
  
  
  
  


• Part 2 verifies the following ILOs
  
  
  
  • Ability to report on definitions, concepts and facts. This tests knowledge and correct understanding of the subject matter (ILO 1, ILO 3, ILO 5)
  
  
  • Problems including calculations verify the correct understanding of the problem and the ability to solve the problem using an appropriate method (ILO 2, ILO 4, ILO 5)
  
  
  • The ability to critically assess concepts is tested by open questions asking, e.g. for interpretation of results or applicability of different methods in practice (usefulness in ”real” situations) (ILO1, ILO 3)