CFA Corporate Finance Level 2

Learn CFA Corporate Finance Level 2 Syllabus with more illustrations and case studies

Take this Course for $21
Welcome to Corporate Finance CFA Level 2 Course.
As the name indicates, this course covers Corporate Finance Paper of Level 2 of CFA Exams.
About Coverage:
Section 1 will cover Reading 23: Capital Budgeting
Section 2 will cover Reading 24: Capital Structure
Section 3 will cover Reading 25:Dividends and Share Purchases: Analysis

Teaching and Learning Style:
This course is structured in self paced learning style. It is suggested to take screenshots of case studies for reference back during problem solving. Approaching the course with note book and pen or MS Excel and solving problems paralelly along with instructor will make you feel like attending real class and improve your listening and learning experience.
Teaching and Learning outcomes:
By taking this course, you will be able to

  1. calculate the yearly cash flows of expansion and replacement capital projects and evaluate how the choice of depreciation method affects those cash flows;
  2. explain how inflation affects capital budgeting analysis;
  3. evaluate capital projects and determine the optimal capital project in situations of a) mutually exclusive projects with unequal lives, using either the least common multiple of lives approach or the equivalent annual annuity approach, and b) capital rationing;
  4. explain how sensitivity analysis, scenario analysis, and Monte Carlo simulation can be used to assess the stand-alone risk of a capital project;
  5. explain and calculate the discount rate, based on market risk methods, to use in valuing a capital project;
  6. describe types of real options and evaluate a capital project using real options;
  7. describe common capital budgeting pitfalls;
  8. calculate and interpret accounting income and economic income in the context of capital budgeting;
  9. distinguish among the economic profit, residual income, and claims valuation models for capital budgeting and evaluate a capital project using each.
  10. explain the Modigliani–Miller propositions regarding capital structure, including the effects of leverage, taxes, financial distress, agency costs, and asymmetric information on a company’s cost of equity, cost of capital, and optimal capital structure;
  11. describe target capital structure and explain why a company’s actual capital structure may fluctuate around its target;
  12. describe the role of debt ratings in capital structure policy;
  13. explain factors an analyst should consider in evaluating the effect of capital structure policy on valuation;
  14. describe international differences in the use of financial leverage, factors that explain these differences, and implications of these differences for investment analysis.
  15. compare theories of dividend policy and explain implications of each for share value given a description of a corporate dividend action;
  16. describe types of information (signals) that dividend initiations, increases, decreases, and omissions may convey;
  17. explain how clientele effects and agency issues may affect a company’s payout policy;
  18. explain factors that affect dividend policy;
  19. calculate and interpret the effective tax rate on a given currency unit of corporate earnings under double taxation, dividend imputation, and split-rate tax systems;
  20. compare stable dividend, constant dividend payout ratio, and residual dividend payout policies, and calculate the dividend under each policy;
  21. explain the choice between paying cash dividends and repurchasing shares;
  22. describe broad trends in corporate dividend policies;
  23. calculate and interpret dividend coverage ratios based on a) net income and b) free cash flow;
  24. identify characteristics of companies that may not be able to sustain their cash dividend.
Teaching Background:
Indian scenario has been considered for explaining concepts through case studies.
Wishing you all the very best to excel in Finance World.

Course Curriculum

Capital Expenditure
How to Evaluate Projects
Principles in Capital Budgeting
Cash Flow and After tax principle
Incremental Principle
Factors affecting Incremental Cash Flow
Inflation adj principle
Long Term Fund Principle
Capital Budgeting Steps
Case Study NPV
NPV Case Study on Tax Savings 2
NPV Case Study on Tax Savings
Case Study NPV Tax Benefit
NPV using Incremental Discount Rate Case Study
NPV Case Study Opportunity Cost
Cost Reduction Projects (Introduction)
Case Study Cost Reduction Projects
Cash Flows - Point of View
Case Study Point of View
Project and Equity IRR
Abandonment Decision
Abandonment Decision
Replacement Decision (Excel based)
Replacement Decision
Aggregate Cash Flow Method (Excel based)
Incremental Cash Flow Method (Excel based)
Incremental Cash Flow Method (Hand written)
Replacement Analysis Case Study 1
Replacement Analysis Case Study 2
Replacement Analysis Case Study 3
Replacement Analysis Case Study 4
Equated Annual Benefit & Cost
Equivalent Annual Cost CS
NPV over Different Life
Limitations of Incremental Cash Flow Method
Money and Real Cash Flows
Money Disc Rate and Real Disc Rate
Inflation and Multiple Cash Flow terms
Intersection of Money and Real terms with inflation
Money Cash Flow and Real Cash Flow Case Study 1
Money Cash Flow and Real Cash Flow Case Study 2
Money Cash Flow and Real Cash Flow Case Study 3
Money Cash Flow and Real Cash Flow Case Study 4
Present Value of Cash Flows from MCF and RCF
Issues with Inflation Rate 1
Issues with Inflation Rate 2 and Case Study
Risk and Uncertainity
Case Study Risk Uncertainity
Probability and PD
Expected Value
Case study EV
Standard Deviation
Steps in Computing Standard Deviation
Standard Deviation - Simple Case Study
SD in Decision Making
Case Stdy SD Decision Making
Risk Adjusted Discount Rate
Case Study RADR
Case Study 2 RADR
Certainity Equivalent Factor
Certainity Equivalent Factor Example
Case Study Certainity Equivalent Factor
Sensitivity Analysis
Case Study Sensitivity Analysis
Comprehensive Case Study on Sensitivity Analysis
Decision Tree Introduction
Stages and Rules
Evaluation rules
Case Study 1 Decision Tree
Case Study 2 Decision Tree
Decision Tree Comprehensive Case Study
Simulation Introduction
Simulation eg
Simulation steps
Case Study Simulation
Hilliers Model
Hillier Case Study part 1
Hillier Case Study part 2
Sensitivity and Scenario Analysis in Capital Budgeting - Introduction
Steps in Scenario Analysis
Case Study 1 Scenario Analysis
Case Study 2 Part 1 Scenario Analysis
Case Study 2 part 2 Scenario Analysis
Business Financing Decisions
Debt Vs Equity Financing Decision
Good Time and Bad Time for Debt Equity Funding
Capital Structure
Capital Structure (Talking Head)
Capital Structure Mix (Talking Head)
Factors of Capital Structure Mix (Talking Head)
Desining Optimal Capital Structure (Talking Head)
Capital Structure Case Study 1(Talking Head)
Capital Structure case Study 2 (Talking Head)
Capital Structure case Study 3 (Talking Head)
Capital Structuring Case Study 4
Case Study on Capital Structuring and Tax Shield
Financial Break Even and Indifference Analysis
Capital Structure Theories - Net Income Approach
Capital Structure Theories - Net Operating Income Approach
Capital Structure Theories - Traditional Approach
Capital Structure Theories - MM Approach and Arbitrage Case Study
Case study on Arbitrage
Introduction to the course and dividend
Case Study on Basic terms of dividend
Dividend Dates
Case Study Dividend Dates
Strategic benefits of Merger
Dividends and Market Price
Different Valuation Models
Dividend Policy
Asset based Valuation Model
Case Study Asset Based Valuation Model
Common Sense Approach
Dividend Models
Walter Model
Walter Model Case Study
Lintner model
Lintner model Case study
MM Model
MM Model Formula
author

CA N Raja Natarajan

Instructor

I am a Chartered Accountant with tonnes of passion for teaching.

I teach Financial Management & Strategic Financial Management for Chartered Accountancy, Cost and Management Accountancy and Company Secretary students in Ernakulam, India. I also hold Post Graduate Diploma in Business Administration in Finance from Symbiosis, Pune and Bachelors in Commerce, from Loyola College, Chennai.

I worked in State Bank of India as Assistant Vice President - Credit for a period of four years after which i started my Chartered Accountancy Practice. During the stint in State Bank of India, I worked on credit proposals of Mid Corporate Units and gained good experience in Financial Analysis, Risk Assessment, Viability Study, Evaluating business models, Project Finance, Working Capital Management, etc.

I conduct work shops for Entrepreneurs, Chartered Accountancy / Cost and Management Accountancy Students on the topics like Project Finance, Credit Risk Assessment, Entrepreneurship Development, Finance for Non Finance Executives, etc.

I love teaching and i want fundamentals of accounting and finance to reach students and so i am here.