IEOR E4403
Advanced Engineering and Corporate Economics


Syllabus:
Interpreting Financial Statements

Balance Sheet and Income Statement

Cash Flow Statement

Free Cash Flow

Financial Statements and the Value Problem

Balance Sheet Decomposition

Sustainable Growth

Financial Statements Footnotes

Case Examples

Evaluating Economic Performance of Companies and Industrial Projects

Profitability Analysis

Turnover-Control Ratios

Leverage and Liquidity Analysis

Discrete and Continuous Compounding

Figures of Merit

The NPV Criteria

The Benefit-Cost Ratios Criteria

The Project Balance Concept; Conventional, Potentially Profitable, Pure and Mixed Investments

Determining the Relevant Cash Flows

Dividend Policy & Debt Policy

Lintner’s Model and the Dividend Controversy

Modigliani-Miller Theory

Debt Policy

Weighted Average Cost of Capital & Optimal Capital Structure

WACC Tree

Estimating WACC parameters

Unlevering and Relevering Betas

Forecasting and Valuation of Free Cash Flow

Managing Growth

Economic Value Added

Valuation with Changing Capital Structure

Optimal Capital Structure

Cost of Financial Distress

The Pecking Order of Financing Choices

Deterministic Capital Budgeting Models

Pure Capital Rationing, with no Lending or Borrowing Allowed

Capital Budgeting, with Equal Borrowing and Lending Rates

Capital Budgeting, with Unequal Borrowing and Lending Rates

Discrete Capital Budgeting

Capital Budgeting with Multiple Objectives

Utility Theory

Preference and Ordering Rules

Properties of Utility Functions

Empirical Determination of Utility Functions

Game Theory

Static Games

Dynamic Games

Incomplete Information

Dynamic Games with Incomplete Information