ACC 933 FINANCIAL MANAGEMENT
The Course is organized into the following nine Units:
Unit 1: Overview of Corporate Finance
Unit 1 lays the foundation for the whole course. It describes the three (3) major areas namely, financial markets, financial services and corporate finance. The course begins with a discussion of the various careers that develop from the study of Financial Management. It further lays out the structures of various business entities from sole proprietorship to corporate structures and the implications inferred.
Accounting is a prerequisite to this course and a quick review begins in the opening unit with a review of Cash Flows and Taxes. Regardless of how confident you may be in these areas, review them carefully as the financial manager interprets the information differently from the accountant. The financial manager works with the information to make decisions or to identify “what if” scenarios usually resulting from the inclusion of intangible issues that may include such things as corporate politics or other vested interests within the company. Also, the finance manager works within corporate committees that include all of the disciplines such as marketing, human resources and operations to name a few. This is a recurring theme in the text as each chapter usually identifies multidisciplinary issues that may impact the chapter topic.
Unit 1 Key Concepts and Learning Outcomes are detailed at the beginning of each Unit
Unit 2: Financial Statements and Long-Term Financial Planning
Unit 2 continues the review of accounting through financial statement analysis and financial planning and forecasting. Once the accounting basics are reviewed, you are introduced to how the financial manager may use and assess the information. This develops into how the information can be used to predict the future through Pro Forma statements. In reality, these predictions also form the structure usually of company goals.
Unit 2 Key Concepts and Learning Outcomes are detailed at the beginning of each Unit
ASSIGNMENT ONE is due after completion of Unit 2
Unit 3: Valuation of Future Cash Flows
Unit 3 deals with the Time Value of Money and specifically with the calculations underlying the types identified. These form the basics of more complicated concepts such as Net Present Value (NPV) and various asset valuation models including cash flow valuation and bond valuation.
Unit 3 Key Concepts and Learning Outcomes are detailed at the beginning of each Unit
ASSIGNMENT TWO is due after completion of Unit 3
Unit 4: Capital Budgeting
Unit 4 covers specifically, capital budgeting, its principles and techniques, and other topics in capital budgeting including project risk. The NPV or net present value method is outlined, using the discount rate as your total risk benchmark. Future cash flow expectation is used. Various forms of risk also are included and you are led to understand how those variables can be quantified, albeit a projection, assumption or opinion by the financial manager, which would usually be an informed and substantiated opinion.
Unit 4 Key Concepts and Learning Outcomes are detailed at the beginning of each Unit
Unit 5: Risk and Return
Unit 5 discusses risk and return and valuation of financial securities, which has to account for the relative risk perceived to be associated with it. The risk return trade-off is described through its various constituents. Different stakeholders have different concepts of risk and the return they should then expect. Many of them use quantifiable variables to do that. Once these are discussed, it becomes a natural extension that a hierarchy of risk can be quantified for different financial securities. Many of these valuations use the Time Value of Money concept to quantify it on the basis that the value of a security has to include expected and or forecasted cash flows. The various definitions and formulas are covered.
Unit 5 Key Concepts and Learning Outcomes are detailed at the beginning of each Unit
ASSIGNMENT THREE is due after completion of Unit 5
Unit 6: Cost of Capital and Long-Term Financial Policy
Unit 6 deals with the cost of capital, leveraging and its impact on the capital structure and the company’s dividend policy. There are various costs associated with formulating the capital structure of a company. There is an optimal structure, which would minimize the cost especially when having to use a leveraging strategy to do it. Leveraging is borrowing and this implies the company has to borrow from a bank, other financiers or if it is strong enough it may issue paper, bonds or other instruments. This is where topics covered in earlier units tie in. A firm’s dividend policy helps it to decide what to do with excess cash it generates. The company may decide to reinvest in the company instead of issuing dividends but it may reach a point where it cannot generate a reasonable or prescribed return, such as ROI, so it decides to give it back to the investors in the company i.e. shareholders. All the different strategies and arguments are presented.
Unit 6 Key Concepts and Learning Outcomes are detailed at the beginning of each Unit
Unit 7: Short-Term Financial Planning and Management
Unit 7 addresses the working capital question. The subjects of short-term financial planning, cash management, and credit management are covered. It deals with the management of the company through managing working capital by managing current assets and current liabilities. Unit one and two reviewed such issues as ratio analysis. Other previous units dealt with where a company can go to finance operations. Optimal management of assets and liabilities are a method the company can use to finance operations internally rather than using outside and possible more expensive sources. Managing turnover of receivables and payables are an easy way of doing that and other methods are identified and methods of quantifying them are covered.
Unit 7 Key Concepts and Learning Outcomes are detailed at the beginning of each Unit
ASSIGNMENT FOUR is due after completion of Unit 7
Unit 8: Topics in Corporate Finance
Unit 8 contains the important special topic of leasing. Leasing techniques and the lease versus buy discussion is quantified. NPV again plays an important role, which is understandable given the concept of projected cash flows. Another special topic covered is international corporate finance including Mergers and Acquisitions.
Unit 9: Derivative Securities and Corporate Finance
Unit 9 covers risk management and derivative securities. These are methods of hedging risks and engineering products to mitigate risk.
Unit 9 Key Concepts and Learning Outcomes are detailed at the beginning of each Unit
ASSIGNMENT FIVE is due after completion of Unit 9