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Corporate Finance

Free Corporate Finance study guide: 10 units with summaries, key ideas, flashcards and 300 practice questions with step-by-step solutions.

Lines up with: College intro corporate finance course.

Units

1. UNIT 01

   Goals of the Firm and Financial Statements

   Corporate finance asks how a firm should invest, finance and manage cash so that the value of the owners' shares is as high as possible. This unit sets that goal and teaches you to read the financial statements in terms of cash flow, which every later unit relies on.
2. UNIT 02

   Time Value of Money

   A dollar today is worth more than a dollar tomorrow because it can earn a return. This unit teaches compounding and discounting, the tools behind every valuation in finance.
3. UNIT 03

   Annuities, Loans and Amortization

   Most real cash flows come in streams: loan payments, salaries, rents and dividends. This unit gives shortcut formulas for level, growing and never-ending streams and shows how loans are paid off.
4. UNIT 04

   Bond Valuation and Interest Rates

   A bond is a promise to pay fixed coupons and a face value, so its price is the present value of those payments at the market's required yield. This unit covers bond pricing, yields, interest rate risk and what drives interest rates.
5. UNIT 05

   Stock Valuation

   A share of stock is worth the present value of the cash it will pay its owner. This unit values stocks with dividend models, free cash flow models and multiples, and explains where growth comes from.
6. UNIT 06

   Risk, Return and Diversification

   Investors demand higher returns for bearing more risk, but not all risk counts. This unit measures return and risk and shows how diversification removes firm-specific risk, leaving only market risk to be rewarded.
7. UNIT 07

   CAPM and the Cost of Capital (WACC)

   The CAPM turns systematic risk (beta) into a required return, and the WACC blends the costs of debt, preferred and equity into a single discount rate for the firm. This unit shows how to estimate both and when to adjust them for project risk.
8. UNIT 08

   Capital Budgeting: NPV, IRR, Payback

   Capital budgeting decides which long-term projects a firm should take. This unit compares the main decision rules and shows how to build a project's incremental after-tax cash flows.
9. UNIT 09

   Capital Structure and Payout Policy

   How should a firm split its financing between debt and equity, and how should it return cash to shareholders? This unit covers M&M, taxes, distress costs and the main theories of payout policy.
10. UNIT 10

    Working Capital and Short-Term Finance

    Day-to-day finance is about having the right amount of cash, inventory and credit at the right time. This unit covers the cash cycle, credit and inventory decisions, cash budgets and the true cost of short-term borrowing.