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Introduction to Courses in Structured Finance

Written By Finance on Monday, November 7, 2011 | 9:19 PM

Description:

The subject of Structured Finance deals with the studying of the techniques necessary to economically evaluate the feasibility of new business investment projects. The ultimate aim of the investment analysis is to provide business professionals, from many different disciplines, a methodology that enables them to assess the emerging business ideas and determine if these ideas can create any value for the shareholders.

Overall Objectives:

The courses in structured finance are taught in various colleges and universities and these courses aim at equipping the students with all the knowledge required to face the different challenges that are associated with a new business idea. The main objectives can be summarized as follows:

To determine the key elements of a new business idea, with particular emphasis on the concept of cash flow and its various forms.

To handle the most common techniques in the assessment of business processes: the method of the Discount Cash Flow (DCF).

To determine the risk factors associated with any new business plan.

Understand the difference between profitability and liquidity in evaluating a business.

Quantifying the financial cost of debt, own funds and the correct determination of the assets and liabilities of the company.

Analyze the appropriate choice of capital structure (borrowed funds / equity) towards the creation of value.

To learn the methodology required to conduct a comprehensive analysis of an investment project.

Learning Methodology

The knowledge of this subject is acquired through study of all the business theories of the modern day economic systems. It is desirable that the students have prior knowledge of financial mathematics to carry out the study of this subject as this subject includes various case studies and mathematical calculations to determine profitability. Thus, students are given assignments from time to time and these assignments include case study of various new business ideas and their effectiveness.

Required Dedication

This is certainly a complex course as it involves a lot of analytical and mathematical concepts of finance which are needed to predict or determine the feasibility of a new business idea. A student would be required to dedicate few hours regularly in order to learn all the theoretical concepts associated with this subject. The practical assignments could also be time consuming and so a student has to balance between reading theoretical concepts and completing practical assignments.

Conclusion:

In spite of all these challenges a course in structured finance can be very rewarding for those who successfully complete it.

By Rajot Chakraborty

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