FINANCIAL MANAGEMENT OF INTERNATIONAL BUSINESS
Italian. Some subjects, as required by students, will be in English.
The purpose of the course is to analyze the financial dynamics of companies and in particular those of international ones. Knowing the variables that underlie the investment and financing decisions and be familiar with models for the evaluation of these decisions are crucial for future managers. Therefore, starting from the analysis of risks, the course aims to provide useful tools for the assessment of investments and for the measurement of companies’ financial structure by analyzing the financial dynamics of the sectors among which energy, banking and insurance.
The learning outcomes of the course can be as follows:
Knowledge and understanding: the student must know the methods to assess investment and financing decisions of international firms. Indeed, the student must be able to understand the relationship between investment decisions and financing decisions and the impact of each choice in terms of financial structure on costs of management and on the system of risks.
Applying knowledge and understanding: at the end of the course, the student must be able to recognize the main risks of firm with reference to the main industries, to assess the financial structure of international firms, to identify the best financing solutions.
Making judgements: after the analysis of the main models of investments assessment taking into accounts the costs of the financial structure, the student will be able to understand costs and benefits of each model and to use it in a critically way. Through the preparation of the project work, the students will learn to independently find information on risks of each firm and to identify the drivers of each choice about the sources of funds.
Communication: the student must be able to answer clearly, concisely and exhaustively both the written and the oral test questions. Through the presentation of project works, the students will also develop the ability to build a presentation in PowerPoint and explain their analysis in a synthetic way. Students are invited to do this work in English to improve their language skills.
Lifelong learning skills: the student must demonstrate a good learning ability by deepening his/her knowledge on relevant bibliographic references for the subject field to be studied. The student will also have to demonstrate how to apply knowledge gained to the specific risks of international firms.
Students must know the principles of corporate finance.
The main topics are: the risk and the risk management; the balance sheet; analysis of investments: the Discount Cash Flows (DCF) model and Internal Rate of Return (IRR); the theory of Modigliani and Millar and its evolutions; ratio analysis and financial analysis; the cost of credit: credit standing, forms of debt, internal rating and credit scoring, external rating and rating agencies; the business risk: the Modern Portfolio Theory and the Capital Asset Pricing Model (CAPM); the analysis of the main sectors at international level.
The content of the course can be divided into several blocks of lessons whose duration depends on the level of preparation of students and their familiarity with the concepts of corporate finance. On average, the course is structured as follows:
I module – (10 h) – Discussion on risks and analysis of investments
Risk management and the importance of the risk identification phase within the risk management process. Analysis of the main models for the assessment of investments, the risk of investment and the opportunity cost of the alternative investments.
II module – (16 h) – Analysis of the cost of debt
Analysis of the main models for the assessment of the cost of debt. The process of identification of rating. Credit scoring models.
III module – (16 h) – Analysis of the cost of equity
Analysis of the main models for the assessment of the cost of equity. The identification of the difficulties related to the assessment of the risk premium.
IV module – (6 h) – Project works
The students divided in groups will analyze specific international firms by identifying the risks system, investment opportunities, the best choices in terms of equity capital and debt. In addition to the analysis, students will provide possible solutions to overcoming the criticalities that may characterize the financial management of an international firm. Presentations give rise to discussions that allow to integrate theoretical contents of the course.
The course will be organized in frontal lessons and project works. In the first part of the course, the professor will present the models of analysis of investment and financing decisions. In the second part, students will work together with the analysis of empirical cases through which they will deepen the financial dynamics of the main sectors.
Materials provided by the teacher on Moodle platform.
For the students, the exam depends on the presentation of the project work and of a test consisting of open questions. Each group has 20 minutes to show the project. Additional 10 minutes are devoted to questions.
For non-students, the exam consists of a test (open questions) and of an oral interview.