Investment Analysis

George Μ. Katsimbris, Emeritus Professor

Office 334

E-mail: katsimb@unipi.gr


The scope οf Financial Management

Every key decision made by a firm’s managers has important financial implications. Management daily faces questions like the fol1owing: Will a particular investment be successfu1? Where will the funds come from tο finance the investment? Does the firm have adequate cash or access to cash to meet its daily operating needs? Which customers should be offered credit? How much inventory should be held? Etc.

Financial Management involves the investment, financing, and dividend decisions οf the firm. The.general1y accepted goal of the firm is value maximization. Financial managers must plan fοr, acquire, and use funds ίο a way that makes the maximum contribution to efficient use of resources. This requires familiarity with the financia1 markets from which funds are drawn as wel1 as with the products/markets in which the firm operates. All financial decisions involve a1temative choices between internal versus externa1 funds, long-term versus short-term projects, long-term versus short-term financing, etc.

Decisions relating to value maximizatiοn involve a trade-off between risks and returns, and must be made within the framework of socially responsible behavior as well in relation to dynamic external environments, both domestic and international. Lastly, the firm’s goal of value maximizatiοn is subject to the possible existence of conflicts between owners and mangers, as well as between owners and creditors of the firm.


Required Textbook:


Additional Bibliography:

Performance Evaluation

During the course there will be homework assignments from the end-of-chapter problems. Υou are expected to work out the solutions of most (if not all) of those problems. Υour homework will not be col1ected and sο will not be graded.

Final1y, there will be a final examination based on the material covered in the lectures and the assigned chapters of the required textbook [BE]. For those who fail to pass [receive at least 5] the Final Exam there will be a Make-up Exam [επανεξέταση].


Tentative Schedule of Class Lectures


1st Meeting:

Αn Overview οf Financial Management, Financia1 Statements & Cash Flows.

BE chapters 1 & 2 (pages 47-70).

Analysis of Financial Statements. BΕ ch 3.

End of chapter problems: Ch 2: 2.5, 2.10, 2.12, Ch 3: 3.3 – 3.6, 3.9, 3.10 & 3.11.


2nd Meeting:

The Time Value of Money: BE ch 4.

End of chapter problems: 4.1-4.8, 4,12, 4.13, 4.23, 4.24, 4.25, 4.33 and 4.34.


3rd Meeting:

Bonds Valuation: BE ch 5

End of chapter problems: 5.1-5.8, 5.13 & 5.21.


4th Meeting:

Risk, Returns and Capital Asset Pricing Model: BE Ch 6

End of chapter problems: 6.1-6.13.


5th Meeting:

Stocks Valuation: BE Ch 7

End of chapter problems: 7.1-7.16.


6th Meeting:

 Cost of Capital

BE chapter 9,

End of chapter problems: 9.1-9.8 & 9.13-9.16.


7th & 8th Meeting:

Capital Budgeting Techniques, BE chapter 10.

 End of chapter problems: 10.1-10.10, 10.15, 1016, 10.21 & 10.22