My Norwich University Experience : Managerial Finance

Week Nine of Managerial Finance

WheelCipher — Mon, 28 Apr 2008 12:00:00 GMT

Today marks the beginning of week nine. After this week, we will have a two-week group project, and then we’re free from this class. Just because we’re getting closer to the end in no way means that the work gets easier. This week, we have to do our final individual project which investigates the fair market value of the company we work for. This project culminates with a 10-page written assignment.

Business Valuation has become an important corporate strategy lately. Business valuation principles also guide financial managers and security analysts in structuring mergers and acquisitions; discovering undervalued stocks; and pricing initial public stock offerings, etc. Venture capitalists also use these principles for evaluating new investment opportunities. We have to provide a brief discussion and evaluation of the various valuation methods for determining fair market value. We have to explain the reasons for selecting the specific method of valuation that I am going to use to estimate the fair market value of my company, and provide the sources and the techniques I use to obtain the data such as the average cost of capital, free cash flows, the rate of growth in earnings/cash flows of the company, the estimate of terminal value of the company, etc.

This is where it gets weird. In order to get the data, I have to get with some people on the financial side of our company and explain to them that I am in the middle of my MBA program and in order to accomplish this task in my Managerial Finance class, I will need for them to provide me with confidential and very strategic data. I’ve never done that before.

If they refuse to provide that, I have been instructed to request “ball park” numbers so that I can complete the assignment. While this might be a little weird, I think it will work out. My management supports my efforts to get this degree. The bad part is that I am on vacation this week and my requests and all collaboration will have to be done via e-mail.

This is once again an example of how Norwich uses real-world examples to get the point across. This is much better (in my opinion) than using a fictional corporation that might be presented in a textbook. But to be honest, I will feel the monkey being removed from my back when this class is over. I am not an expert in financial matters. This has been a very difficult class, to say the least.

Scott Davis is a manager for a large media and communications company in Austin, TX. He has worked there since June of 2001. Scott has an Associates degree in Information Systems and a Bachelors degree in Management from Kaplan University. In 2009, Scott will have earned his MBA from Norwich University. He loves fan mail and feedback from his readers. His hobbies include distance education issues, educational research, organizational leadership, training, and photography. Scott's blog is titled "Divide by Zero". He enjoys fielding questions from people who are interested in distance education. So if you have anything on your mind, please feel free to drop him a line from the contact page listed below. All inquiries will be answered as soon as possible.

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How Many More Weeks to Go?

WheelCipher — Mon, 17 Mar 2008 18:43:00 GMT

It’s week three in the Bat Cave of Managerial Finance. I think it’s pretty sad that I am counting the weeks (and sometimes the days) until this class is over. I turned in my work from last week and it was graded very quickly. I got a 100% on it, and the professor said it was the best in the class. How cool is that? For something that I dislike so much, I am very surprised that I did so well. By the time I was done with the assignment, I was like a deer caught in the headlights. I had the 1000-yard stare.

This week, the concept of a time value of money is introduced, that is, a dollar today is worth more than a dollar received a year from now. (or in this economy, a dollar received now will be worth more than a dollar received 5 minutes from now). Thus if we are to logically compare projects and financial strategies, we must either move all dollar flows back to the present or out to some common future date. This week’s material introduces the concepts that underlie the valuation of securities and their rates of return. We are going to focus specifically on common stock, preferred stock, and bonds. We also look at the concept of the investor's expected rate of return on an investment.

Now this is a part of the economy that I am more interested in. To pique my interest in certain subjects that I will be taking throughout the remainder of this MBA program, I have been hitting the Half Priced Books stores around town. There are three of them close to where I live. There are some great books on leadership, marketing and other things that I really do enjoy learning more about. Recent purchases include Global Literacies, The 8 Practices of Exceptional Companies and Small is the New Big.

For anyone who is considering an MBA program, I think it’s wise to bring as much knowledge to the table as possible. Read up. I know that it has helped me to be able to talk about some of the issues affecting businesses just from my own experience and from the books I have acquired over the years. Good luck!

"Let us tenderly and kindly cherish, therefore, the means of knowledge. Let us dare to read, think, speak, and write." --John Adams

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No Sir ... I Don't Like It

WheelCipher — Wed, 12 Mar 2008 15:25:00 GMT

Now I remember why I don’t like finance. It gives me a headache! This is week two of Managerial Finance. This week we are reviewing the contents and meaning of a firm's income statement and balance sheet. We’re also looking very carefully at how to compute a firm's cash flows from a finance perspective, which is called free cash flows. Then we are diving into financial analysis, which can be defined as the process of assessing the financial condition of a firm. Last (as if that wasn’t enough), we are looking at a set of key financial ratios and having a very intense discussion of their effective use. The joy!

This is only week two and it’s only going to get more difficult. I am trying really hard to keep my eyes and my mind open. But if there is something that I just don’t like, or perhaps even predisposed to hate with a passion, then maybe it’s too late. Math and most topics having to do with numbers is not my area of expertise. I get this feeling that if I can get through this class, the remainder of the MBA program will be “downhill”, as they say.

I will admit that the discussion going on with all of the students in my class is somewhat interesting. Learning about how their company handles financial transactions is pretty neat. But in the end, I still look at accounting and finance as corrupt, to some extent. In the first two weeks, we’ve looked pretty closely at some of the legal ways money and inventory can be manipulated to show desired results. Keep in mind that these methods are legal, but to a layman such as me they can seem borderline immoral, if not downright illegal.

But in nine weeks or so, it will all be over. Then I will move on to Strategic Marketing Management. I have never had a job in marketing, but I love it. I love the psychology of marketing. It’s very interesting to me.

I’ll get through this. I’ll do well. But I don’t have to like it. :

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