IFO Learning Book · Corporate Finance
Last revised 7/17/2026

IFO Learning Book · Corporate Finance

Secondary

How companies make investment, financing, and dividend decisions

Corporate finance is the discipline of how companies allocate capital, structure their financing, and return value to shareholders. This collection covers the four major decision areas corporate finance managers face: how to evaluate whether a capital investment is worth making, whether to fund it with debt or equity, how to set dividend policy, and how to build the financial plans and models that support all three decisions.

The seven articles are compact and technically rigorous. Capital budgeting introduces NPV, IRR, payback period, and profitability index — explaining not just how to calculate them but which to trust and when. Capital structure articles address the trade-off between debt tax shields and financial distress costs. Dividend policy articles connect payout decisions to signaling theory. Financial planning covers budget construction and scenario modeling.

By the end of this collection, a student should be able to evaluate a capital project using multiple methods, explain why optimal capital structure exists as a balance rather than an extreme, and describe the signals a company sends through its dividend decisions.

Learning BookContest Prep
Earn1CreditsinFinance
4Modules7Sessions75Cards14Quizzes

Modules in this Collection’s System

Hover a module to read it directly

Capital Budgeting

1Session

Capital Structure

2Sessions

Dividend Policy

2Sessions

Financial Planning and Forecasting

2Sessions

What You'll Walk Away With

  • Ability to evaluate a capital investment using NPV, IRR, payback period, and profitability index — and to choose between them in ambiguous cases
  • Understanding of debt vs. equity financing trade-offs and the trade-off theory of capital structure
  • Grasp of how dividend policy decisions interact with signaling theory and shareholder expectations
  • Familiarity with budget construction, variance analysis, and financial modeling for scenario forecasting

You'll Have Answers To

  • ?When NPV and IRR give conflicting signals on a project, which should you follow — and why?
  • ?What makes the payback period useful in practice despite its theoretical shortcomings?
  • ?If debt creates tax shields, why don't companies maximize leverage?
  • ?What does the Modigliani-Miller dividend irrelevance theorem say, and why does it not hold in practice?
  • ?What is the difference between a stable dividend policy and a residual dividend policy — and what does each signal to the market?

Critical Concepts Explored

Net Present Value (NPV)Internal Rate of Return (IRR)Payback PeriodProfitability IndexCapital BudgetingWeighted Average Cost of Capital (WACC)Debt FinancingEquity FinancingOptimal Capital StructureFinancial LeverageTrade-off TheoryPecking Order TheoryCash DividendsStock DividendsDividend Irrelevance Theory (Modigliani-Miller)Dividend Signaling TheoryResidual Dividend PolicyOperating BudgetCapital BudgetVariance AnalysisFinancial ModelingSensitivity AnalysisScenario Analysis
Editor's Note
“Rigorous, syllabus-aligned learning material written for IFO preparation”

Each article in this collection is written to the IFO syllabus specification — covering the right concepts at the right depth, with worked examples and clear conceptual structure. The collection is suitable for first-pass learning and for targeted revision before competition.

Editor's Brief
Who it's for
Students preparing for the IFO who need to understand capital budgeting, capital structure, dividend policy, and financial planning at competition depth
Gold Quotes
NPV measures the change in firm value from accepting a project — which is why it is the theoretically correct capital budgeting criterion, regardless of what else is computed alongside it.
About the Curator
IInternational Finance Olympiad

LearningFirst's International Finance Olympiad line builds contest-oriented finance materials for students who need both conceptual clarity and quantitative reasoning. The editorial stance is mechanism-first: every topic connects definitions to cash flows, incentives, risk, and evidence.

IFO Learning Book · Corporate Finance | LearningFirst