BA 306 – Working with Money
Portland State University
School of Business Administration
Fall Quarter, 2009
Instructor : Jim Hunter, MBA
Home Phone : 503 557 1891
email : firstname.lastname@example.org
Office Hours : 12:00 – 14:00, Mon. and Wed., SBA 469(By appointment)
Class Period : Monday and Wednesday
Time : 10:15- 12:05
Dates: September 28 to December 2
Final Exam : Wednesday, December 9, 10:15-12:05
The course covers essential topics in accounting and finance, exclusively designed for
business minors. Topics include understanding, interpreting and forecasting financial
statements, especially for small businesses. Time value of money evaluation techniques
will be used to determine present and future values, evaluate investment projects, value
small businesses, calculate loan payments etc. Sources and costs of financing will also be
introduced. A comprehensive Financial Plan covering the above must be submitted.
1. No prior coursework required
2. Open to students with Freshman, Sophomore, Junior or Senior standing.
3. This course in intended to fulfill the finance and accounting requirements for the SBA
business minor. It does not fulfill requirements for SBA Majors and will not count
towards business units for a Business Major.
CONCEPTS AND APPLICATIONS REVIEWED IN THE COURSE
By the conclusion of the course, you will be able to perform the following financial
decision making analyses, following the lecture and course materials to be covered:
>understand and interpret income statements, balance sheets and cash flow statements
>understand cash flow versus accrual accounting concepts
>calculate and interpret basic financial ratios and common size financial statements
>construct projected financial statements, determining funds needed to finance growth
>understand the nature of fixed versus variable costs and apply to breakeven analysis
>understand time value of money calculations and applications to financial problems
using a financial calculator
>apply time value techniques to the assessment of proposed capital budgeting projects
>understand how companies measure and use their cost of capital in financial decisions
>value small businesses
>introduce capital markets and sources of financing
REQUIRED TEXT AND MATERIALS
1. Finance and Accounting for Nonfinancial Managers, 5th edition by William Droms,
2. Chapter slides in Power Point format available http://faculty.msb.edu/dromsw/
3. Chapter Questions and Problems are at my website at SBA.
4. A financial calculator is needed to do well in the class. The Texas Instruments BA II
is a good one and available at the bookstore. Google TI BAII for a variety of learning
1. Homework (Recorded, but not graded) 10% (all or nothing)
2. Mid term exam 40%
3. Financial Plan 50%
1. You are guaranteed at least the following grade if your weighted average course score
falls within the following percentiles:
A 93 – 100 A- 90 – 93 B+ 87 – 90 B 83 – 87 B- 80 – 83 C+ 77 – 80
C 73 – 77 C- 70 – 73 D+ 67 – 70 D 60 – 67 F below 60
Additionally a curve may be applied to these scores. Class participation is encouraged
and will be used in the final grade evaluation in border-line cases.
2. NO MAKE UP EXAMS WILL BE GIVEN, NO EXCUSES ACCEPTED. The
course outline lists tentative dates for the exams. You are responsible to take the exam
whenever it is given, even if the tentative date changes.
3. Chapter questions and problems will be reviewed in class on the next class date
following the chapter lecture.
1. Personal digital assistants or any other type of mini-computer are NOT allowed for
exams. Financial calculators ARE allowed.
2. During class lectures, please turn off all cell phones and pagers.
3. Failing to demonstrate honesty and integrity will result in a grade of ZERO for
4. Students are held responsible for all announcements made in class.
COURSE OUTLINE (Subject to change)
September 28 Course Overview, Business Forms and Taxes (Chapters 1 and 2)
September 30 Financial Statements (Chapters 3~5)
October 5 Financial Statements continued
October 7 Financial Statement Analysis (Chapter 6)
October 12 Financial Forecasting and Cash Budgeting (Chapter 7)
October 14 Financial Forecasting continued
October 19 Breakeven Analysis for Profit Planning (Chapter 8)
October 21 Time Value of Money (Chapter 11)
October 26 Time Value of Money continued
October 28 Mid Term Preparation
November 2 Mid Term Exam
November 4 Mid Term review, Working Capital Policy (Chapter 9)
November 9 Working Capital Management (Chapter 10)
November 16 Capital Budgeting (Chapter 12)
November 18 Capital Budgeting continued
November 23 Cost of Capital (Chapter 13)
November 25 Common Stock Valuation (Chapter 15)
November 30 Valuing Small Businesses (Chapter 16)
December 2 Long Term Financing (Chapter 14) and Bond Valuation (Chapter 15)
Narrative Portion (approximately 5 pages double-spaced). Each of the topics below will
be identified or addresses as a separate section or paragraph. Students can do the plan
individually or in groups of up to three.
1. Business Concept – a description of the business opportunity being considered
2. Competitive Advantage – why you will make this happen, why you will succeed, what
you can offer that others do not.
3. Competitive Analysis – who is the competition, what are their strengths and
4. Business Risk Analysis – what could go wrong, what are the downsides.
5. Initial capital required – how much and where from.
6. Pro Forma Financial Statement Analysis – discussing the projections from the financial
7. Financial Ratio Analysis – identify at least two ratios that will be important to manage
in order for this business to succeed.
8. Break even analysis – discuss the break even quantity or break even sales required on a
monthly or annual basis.
9. Accounts Receivable policy – will you extend credit, if so, on what terms?
10. Inventory Policy – will you have inventory, how will it be managed?
11. Cost of Capital – estimate the cost of capital for this business.*
12. Capital Budgeting – identify one capital budgeting project and discuss the results of
the calculations. *
13. Valuation – what will the business be worth at the end of three years (2012) assuming
you wanted to sell it? *
* The Financial Plan will be receive an F if this section is not included.
1. Balance Sheets for January 1, 2009 (basically starting up) and then for Dec 31 for
2010, 2011, 2012.
2. Income statements for the years 2010, 2011 and 2012
3. Calculations for estimating the cost of capital for the business.
4. Example of capital budgeting
5. Break even calculations.
6. Estimated Value for the business at the end of 2012.