AC6065 - Financial Management (2022/23)
|Module specification||Module approved to run in 2022/23|
|Module title||Financial Management|
|Module level||Honours (06)|
|Credit rating for module||15|
|School||Guildhall School of Business and Law|
|Total study hours||150|
|Running in 2022/23(Please note that module timeslots are subject to change)||
The module is designed to develop students’ knowledge and critical understanding of the use of financial management. It will also explore the theoretical models, analytical methods and practical aspects of corporate investment and financial decisions making in a competitive business environment and a dynamic capital market.
The principal aims of this module are to:
- Apply knowledge, understanding and skills learnt at levels 4 and 5 to appreciate the wider picture - essentially taking a strategic standpoint and thereby providing an appropriate foundation for higher studies;
- Evaluate financial and non-financial evidence including arguments and assumptions in order to reach objective conclusions;
- Display the accountant’s need to remain innovative and play a pivotal part in the management of change in organisations, which is increasingly becoming a corporate requirement;
- Develop students’ skills, in particular, those relating to the analysis and presentation of data; critical thinking, writing and problem-solving.
- To determine the interconnections between investment decisions, financing decisions and distribution decisions in the form of dividends.
The module also aims to help students in the development of the following skills:
. analysis and presentation of data;
. critical thinking, writing and problem-solving;
. study skills such as critical reflection, time management and self-awareness.
Corporate objectives: corporate strategy and shareholder wealth
maximization agency costs, stakeholders, and corporate governance
. Corporate valuation: alternative models; valuing equity as an
option, value-based management including complex investment
appraisal techniques: - LO1
- Payback and discounted payback
- Calculating ARR
- Calculating the NPVs, the IRR
- Adjusting for inflation and taxation in DCF
- Capital rationing
- Sensitivity analysis
- Lease, buy back and replacement of assets
. Discuss financial and other objectives in not-for-profit organisations
and the importance of value for money evaluation. - LO2
. Sources of funds from: banks and the capital markets:
- Equity finance
- Debt finance
- Lease finance
- Venture capital
. Cost of capital and capital structure theories and policies in the light
of Modigliani-Miller propositions, agency costs and signaling
- The use dividend growth model
- CAPM, beta factors and adjustments for project specific risk
- Estimating cost of debts for different types of debt
- The calculation of WACC
- Traditional view of dividend policy
- Modigliani and Miller views on capital structure
- Trade-off theory of capital structure
- Pecking order theory and selection of finance
. Dividend and distribution decisions in the light of Modigliani-Miller
propositions, agency costs, signaling and corporate life cycle
. The nature of finance for small and medium sized entities (SMEs)
and their peculiar challenges - LO3
. Managing foreign currency risks and money markets - LO4
- Discussion of different foreign exchange risk
- Translation risk, transaction risk and economic risk
- Using traditional methods versus derivatives to manage currency risks
- Understanding various hedging techniques to manage interest rate risk
- The traditional methods and using derivatives
. Working capital management
- Discussion of the importance of working capital
- Managing accounts receivables and accounts payable
- Cash operating cycle
- Inventory management
- Capital funding strategies, using factoring and associated risk
Balance of independent study and scheduled teaching activity
Learning and Teaching
Teaching will take the form of a 2-hour lecture and a 1-hour seminar programme.
The lecture will be used to explain the key issues of the topics and themes in financial management and corporate finance.
The seminar programme will concentrate on problem-solving exercises and analyses of relevant cases. Questions will be pre-distributed to allow students to attempt answers in advance of the seminar.
The learning and teaching materials will be available ahead of the lecture and seminar sessions on VLE (Blackboard) so students can read and attempt to solve the questions before coming to the class. At the end of each seminar session students will have some questions to work on and reflect their learning in the next lesson.
On successful completion of this module, students will be able to:
LO1. Analyse and critically evaluating relevant literature that provides the corporate objectives underpinnings corporate investment decisions making and demonstrate a critical awareness of how corporate strategies provide the basis for determining appropriate financial strategies and company valuation
LO2. Use quantitative models and independent judgement to analyse financial decisions, cost of capital, capital structure and recommend feasible options that managers can implement, and how risks are factored into the financial decisions.
LO3. Apply theoretical concepts and relevant empirical evidence to justify, recommend and
defend appropriate dividend policies.
LO4. Critically evaluate the types of risk and approaches to Risk management techniques and working capital management
All assessments are designed to support student learning and help develop a deeper understanding of the topics covered in the module.
Formative assessments provide an opportunity to learn and receive feedback on progress.
Summative assessment contributes to the overall mark and grades.
Formal Assessment will comprise of individual report (40%) and written examination (60%).
The individual report will examine students’ continuing engagement with the course material in management accounting and corporate finance.
The written examination will be a 3-hour closed book assessment. The examination questions will test students’ knowledge and understanding of the subject matter, as well as the cognitive skills of analysis, synthesis, and evaluation.
Arnold, G, Corporate Financial Management, 5th edition, 2013, published by Pearson Education, ISBN-13: 9780273758839
Pike, R, Neale, B & Linsley, P, Corporate Finance and Investment: Decisions and Strategies, 9th edition, 2018, published by Pearson Education, ISBN-13: 9781292208589
Brealey, R, Myers, S & Allen, F, Principles of Corporate Finance, 12th edition, 2017, published by McGraw Hill, ISBN-13: 9781259144387
Watson, D, Head, A, Corporate Finance: Principles and Practice, 8th edition, 2019, published by Pearson Education, ISBN-13:9781292244334
Ross, S, Westerfield, R & Jaffe, J, Corporate Finance: Core Principles and Applications,
12th edition, 2019, published by McGraw Hill, ISBN-13: 9781260091878