Applied Corporate Finance: An Online Class
This is a course of 36 short webcasts (about 1220 minutes apiece), designed both to capture what I do in my regular semesterlong corporate finance class and to supplement my book, Applied Corporate Finance (Fourth Edition), John Wiley & Sons. With each session, you can download slides for that session and a postclass test to go with it (and solutions). If you have my book, the relevant sections of the book are highlighted. The first part are the webcast related to the class and the second part are inpractice webcasts, designed to help you apply the concepts to real companies. The class webcasts are on You Tube and you will need to be online, to watch them. The inpractice webcasts are downloadable to your computer or device and can be watched at your convenience. I have also created a version of this class on iTunes U, and you can get to that class by clicking here. I owe a debt of gratitude to David Schumacher, who helped record and edited these videos. He was a master at making me look good (or at least as good as I could look).
Session Webcast 
Short Description 
Supplementary Material 
ACF 4th Edition 

Intro  
1 
Define what corporate finance covers and its first principles 
1. Slides 
Preface, Chapter 1  
2 
Explain why we need a singular objective, why we pick maximizing stock prices & what can go wrong. 
1.
Slides

Chapter 2  
3 
Look at alternative corporate governance mechanisms and why stock price maximization may still be the best one. 
1.
Slides

Chapter 2  
4 
Define risk at its core, examine how conventional models measure risk & define the marginal investor. 
1.
Slides

Chapter 3  
5 
Go through processes for estimating risk free rates not only in safe currencies but also in risky ones. 
1.
Slides

Chapter 4  
6 
Define what an equity risk premium is and evaluate standard approaches for estimating that premium. 
1.
Slides

Chapter 4  
7 
Present an alternate approach to estimating equity risk premium for a mature market and builds on it to get country and company equity risk premiums. 
1.
Slides

Chapter 4  
8 
Describe the regression approach to estimating beta and what the rest of the regression output tells us about a company. 
1.
Slides

Chapter 4  
9 
Connect betas to fundamental choices that a company makes about what business to be in, how to run that business & how much to borrow. 
1. Slides 
Chapter 4  
10 
Develop an alternate approach for estimating betas that is more robust & intuitive. 
1.
Slides

Chapter 4  
11 
Continue with the alternate approach and extend it to private businesses. 
1.
Slides

Chapter 4  
12 
Define what goes into debt and what it costs to borrow. 
1.
Slides

Chapter 4  
13 
Determine the weights to use to estimate a cost of capital & explain how and why it differs from cost of equity. 
1.
Slides

Chapter 4  
14 
Contrast earnings with cash flows and explain how to estimate the accounting returns on a project (company). 
1.
Slides

Chapter 5  
15 
Go from earnings to cash flows to incremental timeweighted cash flow based measures of return. 
1.
Slides

Chapter 5  
16 
Look at the effect of currency choices on investment analysis and examine how best to deal with uncertainty in your analysis. 
1.
Slides

Chapter 6  
17 
Look at the pluses and minuses of using debt, as opposed to equity. 
1.
Slides

Chapter 7  
18 
Explain the basics of the cost of capital approach to deriving the optimal debt ratio for a company. 
1.
Slides

Chapter 8  
19 
Optimal Financing Mix III: Following up the cost of capital approach 
Evaluate why moving to the optimal debt ratio benefits stockholders in a company & deal with concerns. 
1. Slides 
Chapter 8 
20 
Optimal Financing Mix IV: Wrapping up the cost of capital approach 
Extend the cost of capital approach to commodity and private companies and examine the determinants of optimal debt ratios. 
1.
Slides

Chapter 8 
21 
Look at the Adjusted Present value approach as well as sector averages as guides to optimal debt ratios. 
1.
Slides

Chapter 8  
22 
Examine whether and how quickly a firm that has too much or too little debt should move to its right mix. 
1.
Slides

Chapter 9  
23 
Determine the right kind of financing for a company and evaluate existing debt to see if it measures up. 
1.
Slides

Chapter 9  
24 
Describe historical patterns/trends in dividend policy and look at measures of dividends paid. 
1.
Slides

Chapter 10  
25 
Look at the reasons (good and bad) why companies initiate and change dividends. 
1.
Slides

Chapter 10  
26 
Evaluate how much companies can afford to return to stockholders and compare to cash returned. 
1.
Slides

Chapter 11  
27 
Use the dividend assessment to make judgments on whether companies should return more or less cash to stockholders. 
1. Slides 
Chapter 11  
28 
Examine how companies end up with dysfunctional dividend policies and how they can change those policies. 
1.
Slides

Chapter 11  
29 
Lay out the different ways in which you can approach valuation and define the key drivers of value. 
1.
Slides

Chapter 12  
30 
Look at the estimation processes and challenges associated with cash flows and discount rates in valuation. 
1.
Slides

Chapter 12  
31 
Evaluate the different ways in which you can estimate growth and why it has to be tied to fundamental actions by the firm. 
1.
Slides

Chapter 12  
32 
Put in place key constraints on the inputs used to get the terminal value. 
1.
Slides

Chapter 12  
33 
Examine how to get from the present value of cash flows to the value of equity per share. 
1.
Slides

Chapter 12  
34 
Define control as the difference between two values, status quo and optimal, and examine implications. 
1.
Slides

Chapter 12  
35 
Estimate the price of an asset or stock based on how similar assets or stocks are trading at. 
1.
Slides

Chapter 12  
36 
Provide a narrative that ties first principles to models and tools. 
1.
Slides

Topic  Description  Webcast  Supporting material 
Corporate Governance  The first step in understanding a company is to recognize how corporate governance works in the company. Taking a look at who is on the board of directors and whether the rules of the game are skewed in favor on incumbent managers is a part of this process. In this webcast, I use HP to illustrate how you can use public data to make this assessment.  
Stockholder composition (for risk measurement)  Knowing who owns stock in your company is useful on many levels. In particular, it can alert you to potential conflicts of interest that may arise down the road and how a company's policies may reflect those conflicts.  Presentation  
Estimating the risk free rate  The risk free rate should be easy, right? In some cases, it may be, but it can be difficult to get risk free rates in some currencies, especially when there is default free entity. In this webcast, I look at the ways in which you can extract default spreads for governments to get to a risk free rate in a currency.  Webcast  Presentation Moody's ratings CDS spreads 
Estimating implied equity risk premium  I have been a strong proponent of implied equity risk premiums, forward looking estimates that are extracted by looking at stock prices today and expected cash flows in the future. While I have an implied equity risk premium spreadsheet on my website, I try to get some of the mystery out of both the process and the inputs in this webcast.  Webcast  
Reading a regression beta page  A regression of returns on your stock against returns on a market index is the standard approach to estimating betas. While I do not like these "single slice of history" estimates, the regression still provides useful information about the performance of a stock during the regression period and its riskiness.  Webcast  
Estimating a botttom up beta  A single regression beta is a flawed measure of relative risk. A bottom up beta, which builds up to the beta of a company from its businesses, is not only more precise but also more flexible and forward looking. In this webcast, I describe the mechanics of estimating a bottom up beta.  Webcast  
Debt and the cost of debt  You need the market value of debt and a pretax cost of debt to compute a cost of capital. To get the market value of debt, you first have to determine what items on the balance sheet qualify as debt and convert the book value of the debt into market value. You also have to bring lease and other contractual commitments into the equation. Finally, all of this will require that you estimate a current, long term cost of borrowing.  Webcast  Home Depot 10K Home Depot 10Q S&P rating for HD Spreadsheet 
Measuring accounting returns  In assessing whether a company's existing investments are good or not, we draw on accounting return measures: return on invested capital and return on equity. However, navigating what should be in invested capital and what should not, and how to adjust for accounting inconsistencies is tricky.  Webcast  Walmart 10K (2013) Walmart 10K (2012) Spreadsheet 
Identifying a "typical" project  Knowing what a typical project for a firm looks like is useful not only to undertstand cash flow patterns & risks in investment analysis but also in structuring financing and dividend policy.  Webcast  Presentation 
The trade off on debt  The first step in assessing whether a firm can borrow, and if so, how much, is to look at the benefits of debt and weigh them against the costs, at least on qualitative terms.  Webcast  
The optimal debt ratio  To assess the optimal debt ratio, you can use the cost of capital approach, where you minimize cost of capital (in the standard approach) or maximize firm value (when there are indirect bankruptcy costs)  Webcast  
Debt design  The "right' debt for a firm reflects its assets and cash flows. To design this debt, you can either start with the typical project and work intuitively to the right debt or try a more quantiative approach.  Webcast  
Dividend Trade off  As a company, should you pay dividends? And if so, how much? In this session, I look at the trade off on dividends and why some companies may come under more pressure than others to initial and increase dividends  Webcast 

Dividend policy assessment  With every firm, there are three key questions that lie at the heart of dividend policy: (1) How much cash does this firm return to stockholders, (2) How much could it have returned and (3) Do you trust management?  Webcast  
Valuation  Valuation is the end game, where all of the aspects of corporate finance  investing, financing and dividend policies  come together in one number.  Webcast 