Free Printable Worksheets for learning Corporate Finance at the College level

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Corporate Finance

Corporate finance is a field of finance that deals with the financial decisions made by corporations, such as how to raise and invest capital, manage financial risks, and maximize shareholder value.

Key Concepts

Capital Structure

Refers to the way in which a corporation funds its assets through a combination of debt, equity and other securities.
Optimal capital structure seeks to minimize cost of capital while maximizing shareholder returns.

Financial Markets

Financial markets are the places where corporations raise capital by issuing and selling financial securities, such as stocks and bonds.
Financial markets also provide an efficient way to price securities and determine their value.
Examples: New York Stock Exchange, NASDAQ, Bond Market.

Risk Management

Corporate finance plays an important role in managing financial risks faced by corporations.
These risks include market risk, credit risk, and liquidity risk.
Techniques used for managing risks include hedging, diversification and insurance.

Mergers and Acquisitions

Mergers and acquisitions are primarily financial decisions.
Corporate finance is responsible for portfolio valuation, structuring the transaction, financing and integration of the two companies.

Corporate Governance

Corporate governance refers to the rules and processes in place to ensure that corporations are transparent and accountable to their stakeholders.
This is important for investor confidence, and to make sure companies behave ethically and responsibly.

Important Information

Corporate finance helps corporations make informed financial decisions that maximize shareholder value while minimizing risk.
The main goal of corporate finance is to maximize shareholder value while balancing risk, return and liquidity.
Corporate finance encompasses a wide range of financial activities, including capital budgeting, financial forecasting, and risk management.
An optimal capital structure seeks to minimize the cost of capital and maximize shareholder value.
Mergers and acquisitions require a thorough understanding of corporate finance to make informed decisions regarding pricing, structure, and financing.
Corporate governance is important for investor confidence and to ensure companies operate ethically and responsibly.

Summary

Corporate finance is an important field of finance that helps corporations make informed financial decisions. It involves a variety of financial activities, including capital budgeting, financial forecasting, and risk management. An optimal capital structure seeks to minimize the cost of capital and maximize shareholder value. Mergers and acquisitions require a thorough understanding of corporate finance to make informed decisions regarding pricing, structure, and financing. Good corporate governance is important for investor confidence and to ensure companies operate ethically and responsibly.

Here's some sample Corporate Finance vocabulary lists Sign in to generate your own vocabulary list worksheet.

Word	Definition
Capital	Money or wealth used to start or operate a business.
Debt	Money owed by one person or organization to another.
Equity	Ownership interest in a company, typically represented by shares of stock.
Leverage	The use of borrowed money to increase the potential return of an investment.
Dividend	The distribution of a portion of a company's earnings to its shareholders in the form of cash or stock.
IPO	Initial Public Offering. When a company goes public and offers shares of stock to the public.
Mergers	The combination of two or more companies into a single entity.
Acquisitions	The process of one company taking over another company.
Valuation	Determining the worth of a company.
Yield	The amount earned on an investment, expressed as a percentage of the investment's cost.
Bond	A debt instrument issued by a company or government, typically with a fixed interest rate.
Stock	A type of security that signifies ownership in a corporation and represents a claim on part of the company's assets and earnings.
ROI	Return on Investment. A measure of how much profit or loss was generated by an investment.
Debt-to-Equity	A financial ratio that indicates the degree of financial leverage a company has.
Cash Flow	The amount of cash a business generates and spends during a certain period of time.
Capital Budget	The amount of money that is allocated for long-term investments in a company.
Working Capital	The funds a business has available to pay its short-term bills and obligations.
Financial Statements	Reports that summarize a company's financial transactions and performance.
Risk	The possibility of losing money or having an investment's actual return differ from its expected return.
Liquidity	The ability of an asset to be easily converted into cash.

Here's some sample Corporate Finance study guides Sign in to generate your own study guide worksheet.

Study Guide for Corporate Finance

Introduction to Corporate Finance

Overview of Corporate Finance
- Definition of Corporate Finance
- Importance of Corporate Finance
- Differences between Corporate Finance and Personal Finance
Financial Markets and Institutions
- Types of Financial Markets
- Types of Financial Institutions

Financial Statements Analysis

Balance Sheet
- Definition and Components
- Ratios used to Analyse Balance Sheet
Income Statement
- Definition and Components
- Ratios used to Analyse Income Statement
Cash Flow Statement
- Definition and Components
- Ratios used to Analyse Cash Flow Statement
Financial Statement Analysis Techniques
- Horizontal Analysis
- Vertical Analysis
- Ratio Analysis
- Limitations of Financial Statement Analysis

Time Value of Money and Valuation

Time Value of Money
- Future Value and Present Value
- Compounding and Discounting
Valuation of Securities
- Bond Valuation
- Stock Valuation

Capital Budgeting

Capital Budgeting Techniques
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Profitability Index (PI)
- Payback Period
Capital Budgeting Process
- Project Proposal
- Project Evaluation
- Project Selection
- Project Implementation

Cost of Capital

Definition and Components of Cost of Capital
Weighted Average Cost of Capital (WACC)
Required Rate of Return (RRR)
Marginal Cost of Capital (MCC)

Capital Structure

Definition and Components of Capital Structure
Modigliani-Miller Propositions
Trade-off Theory
Pecking Order Theory

Working Capital Management

Definition and Components of Working Capital
Cash Management
Inventory Management
Accounts Receivable and Payable Management

Dividend Policy

Definition and Components of Dividend Policy
Relevance and Irrelevance Theories of Dividend
Dividend Payout Ratio
Dividend Stability

Conclusion

Recap of Concepts Reviewed
Importance of Corporate Finance in the Business World
Future of Corporate Finance.

Here's some sample Corporate Finance practice sheets Sign in to generate your own practice sheet worksheet.

Practice Sheet for Corporate Finance

Question 1

XYZ Ltd. is planning to invest in a capital project that requires an initial investment of $100,000. The project has a useful life of 10 years and is expected to generate a cash inflow of $20,000 each year for the first 8 years and $10,000 in each of the following 2 years. Calculate the net present value of the project if the discount rate is 12%.

Question 2

ABC Company issued debt at a coupon rate of 6% per annum. The face value of the bond is $1,000 and it has a maturity of 5 years. If the yield to maturity on similar bonds is 5%, calculate the bond's market price.

Question 3

The financial statements of QRS Ltd. for the year ended December 31, 2020 revealed the following information:

Sales: $500,000
Cost of Goods Sold: $200,000
Operating Expenses: $100,000
Tax Rate: 25%
Accounts Receivable: $50,000
Accounts Payable: $20,000
Inventory: $30,000
Long-term Debt: $100,000
Common Stock: $200,000
Retained Earnings: $50,000

Calculate the net income of QRS Ltd. for the year ended December 31, 2020.

Question 4

XYZ Corporation is issuing new common stock. The current stock price is $50 per share and the company plans to issue 10,000 new shares. The investment banker's fees for this issuance will be 5%. Calculate the total amount of new capital raised by the company.

Question 5

RST Ltd. is considering two mutually exclusive capital projects. Project A has an initial investment of $500,000 and is expected to generate a cash inflow of $100,000 per year for 6 years. Project B has an initial investment of $750,000 and is expected to generate a cash inflow of $150,000 per year for 5 years. If the company's cost of capital is 12%, calculate the net present value of both projects and advise RST Ltd. on which project to invest in.

Sample Practice Problem

Problem:

A company has issued $100,000 in bonds with a coupon rate of 8% and a maturity of 10 years. What is the total interest payment over the life of the bond?

Solution:

The total interest payment over the life of the bond is calculated by multiplying the coupon rate by the face value of the bond. In this case, the total interest payment is $100,000 x 8% = $8,000. Therefore, the total interest payment over the life of the bond is $8,000.

Practice Problems

Problem 1:

A company has issued $200,000 in bonds with a coupon rate of 6% and a maturity of 15 years. What is the total interest payment over the life of the bond?

Problem 2:

A company has issued $50,000 in bonds with a coupon rate of 10% and a maturity of 5 years. What is the total interest payment over the life of the bond?

Problem 3:

A company has issued $150,000 in bonds with a coupon rate of 4% and a maturity of 20 years. What is the total interest payment over the life of the bond?

Problem 4:

A company has issued $250,000 in bonds with a coupon rate of 12% and a maturity of 8 years. What is the total interest payment over the life of the bond?

Problem 5:

A company has issued $100,000 in bonds with a coupon rate of 5% and a maturity of 12 years. What is the total interest payment over the life of the bond?

Corporate Finance Practice Sheet

What is the difference between equity and debt financing?
What is the purpose of a financial statement?
What is the difference between a balance sheet and an income statement?
What is the time value of money?
What is the difference between a stock and a bond?
What is the difference between a dividend and a coupon payment?
What is a capital budgeting process?
What is the purpose of a cash flow statement?
What is the difference between a shareholder and a bondholder?
What is the purpose of a risk assessment?

Here's some sample Corporate Finance quizzes Sign in to generate your own quiz worksheet.

Problem	Answer
What is the difference between capital budgeting and operational budgeting?	Capital budgeting refers to the process of allocating financial resources to different types of investments, while operational budgeting involves the planning and allocation of resources for day-to-day operations.
What is the difference between an ordinary annuity and an annuity due?	An ordinary annuity pays out cash flows at the end of each period, while an annuity due pays out cash flows at the beginning of each period.
What are the three components of the Capital Asset Pricing Model (CAPM)?	The three components of the CAPM are the risk-free rate, the market risk premium, and beta.
What is the formula for Net Present Value (NPV)?	NPV = (Cash inflows / (1+discount rate)^t) - Initial Investment
How is Weighted Average Cost of Capital (WACC) calculated?	WACC = (cost of equity * % equity) + (cost of debt * % debt) + (cost of preferred stock * % preferred stock)
What is the difference between systematic risk and unsystematic risk?	Systematic risk is the risk that is inherent in the overall market and cannot be diversified away, while unsystematic risk is risk specific to a particular company or industry and can be reduced through diversification.
What are the three main financial statements and what information do they provide?	The three main financial statements are the balance sheet (provides information about a company's assets and liabilities), income statement (provides information about a company's revenues and expenses), and cash flow statement (provides information about a company's cash inflows and outflows).
What is the difference between a stock and a bond?	A stock represents ownership in a company, while a bond represents a loan made to a company.
What is the difference between a merger and an acquisition?	A merger is when two companies combine to form a new entity, while an acquisition is when one company purchases another company.
What is the difference between operating leverage and financial leverage?	Operating leverage refers to the use of fixed costs in a company's operations, while financial leverage refers to the use of debt financing.
What are the advantages and disadvantages of using debt financing?	Advantages: tax benefits, increased return on equity. Disadvantages: increased financial risk, potential bankruptcy.

Problem	Answer
What is the difference between financial accounting and managerial accounting?	Financial accounting is the process of recording, summarizing, and reporting financial information to external stakeholders. Managerial accounting is the process of providing financial information to internal stakeholders to help them make decisions.
What is the purpose of financial statements?	The purpose of financial statements is to provide useful information about a company's financial performance and position to stakeholders.
What is the difference between the balance sheet and the income statement?	The balance sheet is a financial statement that provides an overview of a company's assets, liabilities, and equity. The income statement is a financial statement that provides an overview of a company's revenues, expenses, and profits.
What is the time value of money?	The time value of money is the concept that a dollar received today is worth more than a dollar received in the future due to the potential for that dollar to earn interest over time.
What is the difference between a bond and a stock?	A bond is a debt instrument that represents a loan from the bondholder to the issuer. A stock is an equity instrument that represents ownership in the issuing company.
What is the difference between a primary market and a secondary market?	The primary market is the market where securities are first issued. The secondary market is the market where securities are bought and sold after they have been issued.
What is the difference between a public company and a private company?	A public company is a company whose shares are traded on a public exchange. A private company is a company whose shares are not traded on a public exchange.
What is the difference between equity financing and debt financing?	Equity financing is the process of raising capital by issuing shares of stock. Debt financing is the process of raising capital by issuing bonds or other debt instruments.
What is the difference between a cash flow statement and an income statement?	The cash flow statement is a financial statement that provides an overview of a company's cash inflows and outflows. The income statement is a financial statement that provides an overview of a company's revenues, expenses, and profits.
What is the difference between a dividend and a stock split?	A dividend is a payment made by a company to its shareholders out of its profits. A stock split is a corporate action in which a company's existing shares are divided into multiple shares.

Questions	Answers
What is the primary purpose of corporate finance?	The primary purpose of corporate finance is to maximize shareholder value by managing the company's financial activities.
What are the three main types of financial decisions?	The three main types of financial decisions are investment, financing, and dividend decisions.
What is the difference between debt and equity financing?	Debt financing involves borrowing money from lenders, while equity financing involves selling ownership shares in the company.
What is the time horizon of a long-term investment?	The time horizon of a long-term investment is typically more than one year.
What is the difference between a primary and a secondary market?	The primary market is where new securities are issued, while the secondary market is where existing securities are traded.
What is the difference between a public and a private company?	A public company is one whose shares are traded on a stock exchange, while a private company is one whose shares are not publicly traded.
What is the difference between a balance sheet and an income statement?	A balance sheet is a financial statement that shows the company's assets, liabilities, and shareholders' equity, while an income statement is a financial statement that shows the company's revenues and expenses.
What is the difference between a cash flow statement and a statement of retained earnings?	A cash flow statement shows the company's inflows and outflows of cash, while a statement of retained earnings shows the company's net income and dividends paid to shareholders.
What is the difference between a bond and a stock?	A bond is a debt instrument that pays interest to the bondholder, while a stock is an equity instrument that pays dividends to the shareholder.
What is the difference between a market order and a limit order?	A market order is an order to buy or sell a security at the best available price, while a limit order is an order to buy or sell a security at a specified price or better.