Corporate Finance Study Guide

Time Value of Money

Master present value, future value, annuities, perpetuities, and effective rates—the foundation for all finance calculations.

Financial Statement Analysis

Analyze liquidity, profitability, leverage, and efficiency ratios; DuPont decomposition; common-size statements for firm evaluation.

Capital Budgeting Techniques

Apply NPV, IRR, MIRR, payback, and profitability index to evaluate and rank investment projects.

Project Cash Flow Estimation

Estimate incremental cash flows including depreciation, sunk costs, opportunity costs, and externalities for capital projects.

Risk and Return Fundamentals

Calculate expected returns, standard deviation, and understand diversification benefits through portfolio theory and correlation analysis.

Capital Asset Pricing Model

Apply CAPM, beta, and the security market line to determine required returns; understand systematic versus unsystematic risk.

Cost of Capital

Calculate WACC using cost of equity, after-tax cost of debt, and preferred stock; adjust for flotation costs.

Capital Structure Theory

Analyze Modigliani-Miller propositions, trade-off theory, pecking order theory, and optimal leverage decisions for firm value.

Financial Leverage and Firm Value

Examine how debt financing affects firm value, earnings volatility, and shareholder returns through leverage analysis.

Dividend Policy

Evaluate dividend irrelevance, signaling, clientele effects, stock repurchases, and practical dividend decision-making frameworks.

Working Capital Management

Manage the cash conversion cycle, credit policy, inventory, and short-term financing for operational efficiency.

Mergers and Valuation

Value firms using free cash flow, comparable company analysis, and comparable transactions; understand merger types and motives.