10230 Financial Theory: Financial Management of Business Firms

Credits: 6 intermediate credits in Economics or in Management

Prerequisites: none

Recommended: Introduction to Microeconomics, Introduction to Macroeconomics, Introduction to Statistics for Students of Social Sciences I, Introduction to Statistics for Students of Social Sciences II

Authors: Arie Nachmias, Zvi Lerman

The course provides an introduction to the field of finance and the major tools of analysis for financial decision-making. It covers a wide range of topics related to financial theory, among them financial statement analysis, managing the firm’s working capital, capital budgeting under conditions of certainty and uncertainty, recruiting internal and external financial sources, capital structure and cost of capital. Special emphasis is on applying financial theory to the Israeli context. The material is presented both verbally and graphically, and where necessary, quantitative tools of algebra and probability theory are used.

Topics: The finance function – the aim of the firm and the role of the financial manager; The global financial crisis of 2008; Financial analysis, planning and control – managerial accounting and analysis of financial statements, financial planning and budgeting; Managing working capital; Managing fixed assets – long-term investment decisions and cash flow capitalization, capital budgeting under conditions of certainty, building cash flow in capital budgeting, capital budgeting under conditions of uncertainty; Long-term financing; Valuation of the firm, capital structure and cost of capital; Financial management under conditions of inflation.