Study Programmes 2015-2016
Corporate Finance - Lectures and Seminars
Duration :
30h Th
Number of credits :
Master in management (120 ECTS)5
Master in management, professional focus in law5
Master in management (120 ECTS)5
Master in business engineering (120 ECTS)5
Master in management (60 ECTS)5
Lecturer :
Marie Lambert, Alain Schockert
Coordinator :
Marie Lambert
Language(s) of instruction :
English language
Organisation and examination :
Teaching in the first semester, review in January
Units courses prerequisite and corequisite :
Prerequisite or corequisite units are presented within each program
Course contents :
The course is organized into two  parts. The course starts with lectures and exercise sessions/case studies on investment decisions. Seminars on firm valuation constitute the second part of the course.

Part one 'Capital Investment Decisions' lays the theoretical foundations for all the topics to follow. Students will acquire theoretical knowledge and practical skills for valuing corporate investment projects.

Module 1 provides an introduction to capital budgeting (time value of money, discounting/compounding, ...) while Module 2 reviews the prerequisites (financial mathematics and financial market theory) of the course. Module 3 addresses the estimation of the Free Cash Flows to the Firm and how to forecast these flows. Module 4 introduces the Discounted Cash Flow method and provides guidelines for computing the Net Present Value of an investment project. Module 5 discusses alternative investment rules (Internal Rate of Returns, the Payback and Accounting Rate of Return criterions) and demonstrates the superiority of the NPV criterion. Module 6 addresses the differences between business and financial risk and covers the following techniques to capture the impact of financing on project valuation: the Adjusted Present Value and the Weighted Average Cost of Capital.
Part two 'Valuation' presents guidelines for firm valuation. Students will study in which circumstances a company needs to be valued and how to proceed. Special attention will be given to corporate events like Initial Public Offering and Merger and Acquisition. 
Throughout the course, illustrative cases and practical exercises will be discussed in class.


Part I: Lectures on capital investment decisions
Basics of discounting and valuation (time value of money, effective/nominal/proportional interest rates, ...)
Determination of the Free Cash Flows to the Firm and forecasts (financial statements, horizontal/vertical common-size statements, working capital, IFRS vs US GAAP)
Valuing real assets

  • Tracking portfolio approach: Net Present Value criterion and Discounted Cash Flow method (risk-adjusted discount rate method)
  • Alternative investment rules
Valuing real assets with corporate taxes

  • Business versus financial risk
  • Adjusted Present Value method
  • Weighted Average Cost of Capital
Case study analysis

Part II: Seminars on Firm Valuation

  • Economic cycle, interest rates and financial assets
  • Valuation methods
  • Initial Public Offering (IPO)
  • Mergers and acquisitions
Learning outcomes of the course :
At the end of the course, students will

  • (1) acquire the fundamental knowledge and understanding in financial management to perform a rigorous analysis of a management problem such as an investment project or a firm valuation.

    Students will be able to (i) compute and forecast cash flows used for project or firm valuation (ii) estimate the prevalent cost of capital to be used to discount cash flows (iii) compute the Present Value of an investment project or a firm (iv) value business acquisition opportunities.

  • (2) be able to solve autonomously concrete complex and transversal financial management problems such as the acquisition of a firm or the investment in a real project by applying modelization tools and by collecting market data.
    Students will apply the tools they have acquired throughout the different modules to value a real investment project. 

  • (3) strengthen their business English and develop a transversal view of a financial management problem in the specific context of a firm or project valuation and financing.
This course contributes to the following Intended Learning Outcomes :
ILO-1 : To strengthen knowledge and understanding of management disciplines and its legal, policy and social context
ILO-2 : Gaining the knowledge and understanding of one of the proposed fields of concentration or to gain deep knowledge in the field of the management being already specialized thru a first University Master Degree . 
ILO-4 : To acquire the capacity to research autonomously and methodically the information needed to solve a complex, transversal management problem

ILO-6: Integrate autonomously researched information, tools, knowledge and context to build and propose, either individually or as part of a team, original, creative and viable solutions to concrete complex management problems whether real or simulated.
Prerequisite knowledge and skills :
The course will extend students' knowledge acquired during an initial bachelor's degree in management. The course therefore requires basic knowledge in financial mathematics, financial analysis and reporting (see infra) and financial markets. As a prerequisite, students are invited to read Chapters 2,3,4,5 and 23 of Hillier, Grinblatt and Titman, Financial Markets and Corporate Strategy (second European edition).
Review of the prerequisites in financial market theory will be organized on Tuesday 22nd September (second part of the class) and on Friday 25th (AM) September. Attendance to these sessions is recommended.
Planned learning activities and teaching methods :
The course will be structured around lectures, exercise sessions in groups and case studies.

Lectures will transfer to students the theoretical knowledge and the practical tools for solving complex investment and firm valuation problems. Students are expected to participate to class and to read the related chapters in the textbook.

Exercise sessions in groups will allow students to apply the tools learnt during the course on a selection of financial management problems. Students are expected to prepare the exercise sessions and to submit their preparatory work on lol@ prior to the session and by following the instructions received on lol@.

Case studies will enable students to test their capacity to research autonomously and methodically the information needed to solve a transversal management problem and to test their capacity to use modelization tools to propose rigorous solutions to complex financial management problems.
Mode of delivery (face-to-face ; distance-learning) :
The course is composed of face-to-face lectures and exercise sessions. Exercise sessions and case study analyses will be prepared through distance learning.

  • Lectures start on September 22nd 2015.
  • Exercises sessions are scheduled on Fridays (from October 2nd onwards) - Groups will be formed automatically on lol@ end of September. Please check lol@ to know your group number and schedule. In exceptional cases, changes from groups will be allowed but exclusively in the form of a swap between two students. Attendance to the (right) exercise session is mandatory and will be controlled. 
  • One exercises session on the prerequisites will be organized on September 25th. You will be asked to enroll on lol@ to this session.
Recommended or required readings :
Mandatory readings

- Hillier, Grinblatt and Titman, Financial Markets and Corporate Strategy, McGraw-Hill, Second European Edition

- Valuation, A. Schockert - Managing Director at Banque Degroof, 2014-2015, HEC-ULg

These readings will enable students to deepen their understanding of the key concepts seen throughout the course. Students' understanding will be tested at the written exam.
Recommended readings

Financial Statement Analysis : An introduction by Elaine Henry, CFA, and Thomas R. Robinson, CFA
Financial Reporting Mechanics - International Financial Statement Analysis, by Thomas Robinson, CFA, Jan Hendrik van Greuning, CFA, Elaine Henry, CFA and Michael A. Broihahn, CFA
Financial Reporting Standards by Elaine Henry, CFA , Jan Hendrik van Greuning, CFA, and Thomas R. Robinson, CFA
Understanding Income Statements by Elaine Henry, CFA and Thomas R. Robinson, CFA
Understanding Balance Sheets by Elaine Henry, CFA, and Thomas Robinson, CFA
Understanding Cash Flow Statements by Elaine Henry, CFA and Michael A. Broihahn, CFA
Financial Analysis Techniques by Elaine Henry, CFA, and Thomas R. Robinson, and Jan Hendrik van Greuning, CFA
Inventories by Michael Broihahn, CFA
Long-lived Assets by Elaine Henry, CFA and Elizabeth A. Gordon

These readings will enable students to deepen their understanding of the prerequisites for the course: Financial Reporting and Analysis. 
Course material
The course material (slides, case studies and exercises) will be available on the course web page on lol@.
Assessment methods and criteria :
Students' final grade for the course is composed of an evaluation of students' engagement during the course (10%) and of a final evaluation (90%).

The final written exam will assess students' understanding of the valuation concepts as well as students' capacity to solve valuation problems. This will make up 90% of their final grade.

Active class participation will make up 10% of the student's grade: students will be assessed on their attendance to the exercise sessions as well as on their class preparations. Exercises and case studies should be prepared and submitted on lol@ by the day before the session.

Relative weighting of individual assessment : 100%

Students who fail the January exam or do not present themselves at the exam will have to retake the exam in the second session organized in August/September. The evaluation is made of one single exam for the two parts. No partial waiver will be granted: in case of failure to the exam, students have to retake both parts.
Work placement(s) :
Organizational remarks :
Students have the opportunity to ask questions on the material during the class and at the end of each session. Questions and Answers sessions with the tutors will be organized at specific times: you will be informed on lol@. A final Questions and Answers session will be organized in December. The session has been scheduled on December 18th from 8.30 AM to 12.30 PM (subject to change).

Students are invited to check the lol@ platform on a regular basis for any practical information regarding the course.
Contacts :

Marie Lambert - HEC-ULg -

Alain Schockert - Managing Director Banque Degroof -

Teaching assistants:
Joachim Davoli -
Boris Fays -

Student instructor :

Maxime Ledent -