Business Finance
ePrep Course for
University Preparation
Business Finance is one of the ten ePrep courses, specially developed by NTU to help NSFs, NSMen, and others, to better prepare for their university studies, whether in Singapore or overseas. It provides an excellent introduction to finance and investment. It is a mustdo course for those intending to do business administration, finance, accountancy, and commerce. It is also very useful for those doing most other courses. Even those not going for further studies in the near future will find this course very useful (they may even be inspired to proceed to university studies).
This Business Finance ePrep course is developed in collaboration with Cengage, the publishers of the popular textbook “Essentials of Financial Management” by Brigham and Houston, In addition to providing this textbook on business financial management at no additional cost, this business finance ePrep course also comes with excellent eLearning materials on business finance provided by the book publisher, Cengage.
There are also lots of materials on other subjects such as corporate finance, engineering economy, various branches of mathematics (including calculus and statistics), physics, mechanics, biotechnology, life science, business and engineering ethics, Python programming, discrete mathematics, etc., so that the students not only get to build up a strong foundation on business finance, they also get to strengthen their knowledge on many other subjects as well. Samples of materials provided can be found below. Most of these materials can be downloaded for later studies.
The provided business financial management textbook is used in NTU NBS and a few other universities in Asia. It is based on a popular American business finance textbook, with three of the chapters adopted by Asian business professors to suit the Asian environment.
In this course, there is also a retired NTU professor acting as a personalized tutor. He can be reached via email or WhatsApp messaging. He will be happy to answer any queries or questions.
Audio: Fuller Intro to Business Finance ePrep Course
Business Finance ePrep Course
– Learning Contents
I. Compulsory Chapters
1. An Overview of Financial Management.
 Explain the role of finance and the different types of jobs in finance.
 Identify the advantages and disadvantages of different forms of business organization.
 Explain the links between stock price, intrinsic value, and executive compensation.
 Identify the potential conflicts that arise within the firm between stockholders and managers and between stockholders and bondholders, and discuss the techniques that firms can use to mitigate these potential conflicts.
 Discuss the importance of business ethics and the consequences of unethical behavior.
2. Financial Markets and Institutions, incorporating Singapore Stock Markets and SGX.
 Identify the different types of financial markets and financial institutions, and explain how these markets and institutions enhance capital allocation.
 Explain how the stock market operates, and list the distinctions between the different types of stock markets.
 Explain how the stock market has performed in recent years.
 Discuss the importance of market efficiency, and explain why some markets are more efficient than others.
 Develop a simple understanding of behavioral finance.
3. Financial Statements, Cash Flow, and Taxes.
 List each of the key financial statements and identify the kinds of information they provide to corporate managers and investors.
 Estimate a firm’s free cash flow and explain why free cash flow has such an important effect on firm value.
 Discuss the major features of the federal income tax system.
4. Analysis of Financial Statements.
 Explain what ratio analysis is.
 List the five groups of ratios and identify, calculate, and interpret the key ratios in each group.
 Discuss each ratio’s relationship to the balance sheet and income statement.
 Discuss why return on equity (ROE) is the key ratio under management’s control and how the other ratios impact ROE, and explain how to use the DuPont equation for improving ROE.
 Compare a firm’s ratios with those of other firms (benchmarking) and analyze a given firm’s ratios over time (trend analysis).
 Discuss the tendency of ratios to fluctuate over time (which may or may not be problematic); explain how they can be influenced by accounting practices as well as other factors; and explain why they must be used with care
5. Time Value of Money.
 Explain how the time value of money works and discuss why it is such an important concept in finance.
 Calculate the present value and future value of lump sums.
 Identify the different types of annuities, calculate the present value and future value of both an ordinary annuity and an annuity due, and calculate the relevant annuity payments.
 Calculate the present value and future value of an uneven cash flow stream. You will use this knowledge in later chapters that show how to value common stocks and corporate projects.
 Explain the difference between nominal, periodic, and effective interest rates. An understanding of these concepts is necessary when comparing rates of returns on alternative investments.
 Discuss the basics of loan amortization and develop a loan amortization schedule that you might use when considering an auto loan or home mortgage loan.
6. Financial Planning and Forecasting.
 Discuss the importance of strategic planning and the central role that financial forecasting plays in the overall planning process.
 Explain how firms forecast sales.
 Use the Additional Funds Needed (or AFN) equation and discuss the relationship between asset growth and the need for funds.
 Explain how spreadsheets are used in the forecasting process, starting with historical statements, ending with projected statements, and including a set of financial ratios based on those projected statements.
 Discuss how planning is an iterative process.
In order to save space, the learning objectives of the following chapters are given on another page
II. Optional Chapters
 Interest Rates.
 Risk and Rates of Return.
 Bonds and Their Valuation.
 Stocks and Their Valuation.
 The Cost of Capital.
 The Basics of Capital Budgeting.
 Cash Flow Estimation and Risk Analysis.
 Real Options and Other Topics in Capital Budgeting.
 Capital Structure and Leverage.
 Distributions to Shareholders: Dividends and Share Repurchases.
 Working Capital Management.
 Derivatives and Risks Management
 Multinational Financial Management.
 Hybrid Financing: Preferred Stock, Leasing, Warrants, and Convertibles.
 Mergers and Acquisitions.
Business Finance ePrep Course
– Why Good for You
I. Academic Reasons

This is a very important fundamental course in business finance and is typically compulsory for all students taking accounting, business administration and other commerce degrees.

This course is one of the most popular “elective” courses taken by other students not doing a businessrelated degree.

Learning a new concept in business finance takes time, and sometimes can be very frustrating. In this course, you have a retired professor acting as your tutor whom you can reach via emails or WhatsApp messaging for consultation.

Clear and detailed explanations of business finance concepts are provided directly in the course site or the provided textbook, as well as through answers and solutions to questions and problems. When faced with any difficulty, the tutor is available for consultations.

The students learn Excel spreadsheet software, an excellent data analysis tool, in the process.

There are also bonus learning materials, such as on mathematics, statistics, psychology, corporate finance, psychology, Python programming, discrete mathematics, biotechnology, etc., provided in the course site so that you can prepare yourself in those areas as well.
II. NonAcademic Reasons

This course provides very important principles of business financial management which are very useful even for personal financial management.

The real Singapore Stock fundamental analysis examples help learners to make better investment decisions.

Successful completion of this universitylevel business finance course not only impress upon the potential employers of your financial management knowledge but your determination and proactive learning characteristics as well.
III. For Those Not Going to Universities
If you are one of the unfortunate ones who are not able to proceed to a university due to poor results or with only O or N levels, do consider taking this course seriously and be inspired to proceed to pursue a university qualification.
Business Finance ePrep Course
– What You Get
I. Free Textbook
“Essentials of Financial Management” which is based on the popular textbook by Eugene F Brigham and Joel F Houston, with chapters adopted by JM Hsu, YK Kong, and AN BanyAriffin, 4th Ed. Dr. YK Kong is a professor in NTU NBS, and this business financial management textbook is used in NTU NBS (Examples: AB1201 Financial Management, BU8201 Business Finance, and MiniMasters Finance Fundamentals).
II. Free Consultation
A retired NTU professor is acting as the tutor. You can consult him via email or WhatsApp.
III. Materials Online
1 Notes, lecture videos, and PowerPoint files.
2 Answers/solutions to all questions/problems in the textbook.
3 Online exercises.
4 Exercises in using Excel.
5 Real examples of Fundamental analysis of stocks listed in SGX.
6 Bonus learning materials in other subjects such as mathematics and statistics, psychology, biotechnology, business ethics, economics, Python programming, discrete mathematics, psychology and corporate finance.
IV. Digital Certificate
A digital certificate on business finance will be issued if you complete the ePrep course by passing all the tests at the end of each of the six compulsory chapters.
Business Finance ePrep Course
– Sample Materials
1. Excel Worked Solution (Key Ratios)
Finding Financial Key Ratios from Financial Report
Excel is a very important tool in finance. Using Excel to perform ratio analysis in this exercise serves two important roles: to learn to perform financial ratio analysis and to practice using Excel. Highlighted here is that the “Fixed Asset Turnover” (E49) ratio is given by sales (E30) over total assets (E17, not shown here).
2. Video Lesson (DuPont Equation)
DuPont Equation
This video not only illustrates the principle of the famous DuPont Equation, but it also shows the pitfall of blindly using the returnonequity ratio as an investment criterion.
3. Problem Walk Through on Video (Economic Value Added)
Finding Economic Value Add – Problem Walk Through
This video problem walkthrough illustrates how to calculate economic value added. It applies the standard equation for computing the economic valueadded, and then shows how the values of the different components are computed.
4. Lecture Video Clip (Profitability Ratios)
Profitability Ratios – Examples of Their Determination
This short video clip of a lecture shows how the three profitability ratios are determined.
5. Online Exercise – Response Feebback Providing Rationale (Free Cash Flow)
This exercise example is about the derivation of free cash flow given the financial data of two consecutive years. After submitting the answer, feedback will be provided. As shown in this example, the derivation steps are shown (discarding net incomes as irrelevant information).
6. Question and Answer (Analysis of Financial Statements)
Question:
Why is it sometimes misleading to compare a company’s financial ratios with those of other firms that operate in the same industry?
Answer:
Firms within the same industry may employ different accounting techniques that make it difficult to compare financial ratios. More fundamentally, comparisons may be misleading if firms in the same industry differ in their other investments. For example, comparing PepsiCo and CocaCola may be misleading because apart from their soft drink business, Pepsi also owns other businesses, such as Frito‑Lay and Quaker.
Business Finance ePrep Course
– Sample Bonus Materials
1. Video Lesson on Mathematics (Second Derivative)
Example applications of second derivatives
The role the second derivative plays in determining whether the curve representing the function is concave upwards, concave downward, or an inflection point.
2. Video Lesson on Physics (Relative Velocity)
Relative Velocities and How to Determine Them Using Vectors
This simple video lesson illustrates that the relative velocity of an object with respect to an observer can be obtained by vector addition.
3. Video Lesson on Corporate Finance (LongTerm Financing of Big Corporations)
Approaches to Financing a Large Corporation
This short video lesson illustrates the various ways big business corporations can finance their operations.
4. CrossWord Puzzle on Biotechnology (Plant Cloning)
5. Worked Example on Engineering Economy (Cost Concept and Design Economic)
Question:
The fixed cost for a steam line per meter of pipe is $450X + $50 per year. The cost for loss of heat from the pipe per meter is $4.8/X^{1/2} per year. Here, X represents the thickness of insulation in meters, and X is a continuous design variable.
a. What is the optimum thickness of the insulation?
b. How do you know that your answer in Part (a) minimizes total cost per year?
c. What is the basic tradeoff being made in this problem?
Answer.
6. Objective Question Exercise on Physics (Electric Field)
Question:
What happens when a charged insulator is placed near an uncharged metallic object?
1. They repel each other.
2. They attract each other.
3. They may attract or repel each other, depending on whether the charge on the insulator is positive or negative.
4. They exert no electrostatic force on each other.
5. The charged insulator always spontaneously discharges.
Answer: (2).
When a charged insulator is brought near a metallic object, free charges within the metal move around, causing the metallic object to become polarized. Within the metallic object, the center of charge for the type of charge opposite to that on the insulator will be located closer to the charged insulator than will the center of charge for the same type of charge as that on the insulator. This causes the attractive force between the charged insulator and the opposite type of charge in the metal to exceed the magnitude of the repulsive force between the insulator and the same type of charge in the metal. Thus, the net electric force between the insulator and the metallic object is one of attraction.
7. Web Exercise on Psychology (Human Development)
Question:
Which of these couples best illustrates the concept of intimacy in a relationship?
a. Ones that talk to each other about their deepest feelings and most personal concerns.
b. Ones that are determined to make their relationship work, despite any difficulties.
c. Ones that have known each other all their lives and understand each other deeply.
d. Ones that feel intense sexual attraction and a variety of physical symptoms of passion.
Answer: (a)
8. Video Lesson on Life Science (Inner Working of Cell Nucleus)
The Inner Working of a Cell Nucleus
This short video lesson illustrates the complex working of the various components in a cell.
9. Video Lesson on Statistics (Random Variables)
Description and classification of Random Variables in Statistics
This short video lesson explains that random variables are numerical values that depend on chance and can be classified into discrete or continuous random variables depending on whether they are countable or not.
10. Python Programming (Solving Quadratic Equation)
Code:
import math
print (“The quadratic equation is of the form ax**2 + bx + c = 0”)
print (“a, b and c have to be integer for this program to function properly”)
a = int(input(“Please Enter a”))
b = int(input(“Please Enter b”))
c = int(input(“Please Enter c”))
discriminant = (b * b) – (4 * a * c)
if(discriminant > 0):
root1 = (b + math.sqrt(discriminant)) / (2 * a)
root2 = (b – math.sqrt(discriminant)) / (2 * a)
print(“Two Distinct Real Roots Exists:”, root1,”, “, root2)
elif(discriminant == 0):
root1 = root2 = b / (2 * a)
print(“Two Equal and Real Roots Exists:”, root1,”,”, root2)
elif(discriminant < 0):
root1 = root2 = b / (2 * a)
imaginary = math.sqrt(discriminant) / (2 * a)
print(“Two Distinct Complex Roots Exists: “, root1,”,”, imaginary, “i, and “,root2,”,”,imaginary, “i”)
Sample Run 1:
The quadratic equation is of the form ax**2 + bx = c = 0
a, b and c have to be integer for this program to function properly
Please Enter a>? 2
Please Enter b>? 1
Please Enter c>? 1
Two Distinct Real Roots Exists: 1.0 , 0.5
Sample Run 2:
The quadratic equation is of the form ax**2 + bx + c = 0
a, b and c have to be integer for this program to function properly
Please Enter a>? 2
Please Enter b>? 1
Please Enter c>? 1
Two Distinct Real Roots Exists: 0.5 , 1.0
Sample Run 3:
The quadratic equation is of the form ax**2 + bx + c = 0
a, b and c have to be integer for this program to function properly
Please Enter a>? 5
Please Enter b>? 2
Please Enter c>? 1
Two Distinct Complex Roots Exists: 0.2 , 0.4 i, and 0.2 , 0.4 i
11. Economics (How Changes in Income Affect the Consumer’s Choices)
1. A change in income shifts the budget constraints
 An increase in income can be shown by an outward shift of the budget constraint; a decrease in income means that the budget constraint shifts inwards
 Because the relative price of the two goods has not changed, the slope of the budget constraint remains the same
2. An increase in income means that the consumer can now reach a higher indifference curve
3. Because the consumer increased his consumption of both goods when his income increased, both cola and pizza must be normal goods
 Definition of normal good: a good for which an increase in income raises the quantity demanded.
 Definition of inferior good: a good for which an increase in income reduces the quantity demanded
4. In the figure below, cola is an inferior good. The consumer’s income increases yet he buys less cola.