Financial Management Honours

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The proposed programme is as follows, but may be subject to change: • Semester 1 and 2: (2008 Academic Year) • Semester 3 & 4: (2009 Academic Year) Students are required to reregister at the beginning of the 3rd semester. Class, or individual sessions may be held to consider proposals for and/or discussions on Research Proposals. Staff will be available during this semester for assistance with Research Proposals. Students undertaking the 2 nd year structured programme (ACC5021W) will undertake three modules on Capital Markets, Advanced Corporate Finance and Strategic Cost Management - until the middle of September and will then be required to complete the research paper component of the programme. 2008 2009 BCOM(HONS) ACC4009W ACC4009Z ACC5021W MCOM ACC5002W ACC5003W Students who register for the BCom (Hons) programme and achieve the required grade will be able to upgrade to the Masters programme in the second year. Attendance at all sessions is an essential requirement for continued permission to remain on the course and for registration. We do understand that your work commitments are important. However, attendance on Tuesday and Saturday is a priority. If you are going to miss a class, please email me with an explanation and go the extra mile for your group. Nonattendance will not be accepted without a detailed reason for such absence. 3. COURSE CONTENT The programme has a decision making focus within a strategic context. Value creation and the principles of valuations are stressed throughout the programme. The content is organised in key areas: 3.1 Financial Markets and Instruments The role of local and global financial markets and the array of financial instruments are analysed and evaluated in the context of the firm’s investment and financing decisions. 3.2 Accounting Information, Financial Analysis and Financial Modelling Accounting data reflects the firm’s relationship between capital markets and investment opportunities, and the results of operations. The course focuses on interpreting this information for decision making. Forecasting financial statements and funding requirements are also covered as well as financial analysis and credit ratings. 2
3.3 Time Value of Money, Risk and Return, the Cost of Capital and EVA These are key underlying concepts in the creation of value. It is not enough for firms to earn a profit, in order to add value the profit must exceed the firm’s cost of capital. The use of Economic Value Added as a measure of performance is evaluated. 3.4 Capital Budgeting The analysis of long-term investments is crucial in maximising value, especially in situations of capital rationing and inflation. The evaluation of capital projects emphasises the tax implications, real options and the estimation of project cash flows. 3.5 Working Capital Management Firms invest substantial funds in working capital. Optimal working capital policies and current asset management can have a dramatic impact on the value of the firm. 3.6 Source of Finance and Capital Structure Excessive use of debt can expose a firm to unacceptable levels of risk. Conversely, conservative debt policies may limit the opportunity for the leverage effect to increase wealth. How do firms select their debt/equity ratios Which sources of finance should firms use 3.7 Valuation of Companies and Fixed Income securities The valuation techniques required to value equity and fixed income securities are fundamental to decision making in corporate finance and portfolio management. Topics include Yield to Maturity, Free Cash Flow, EVA, Growth models, net asset values and price earnings multipliers. The global environment, industry factors, macro-economic variables such as interest rates, as well as firm specific factors impact on the value of securities. 3.8 Theory and Asset Pricing Models The efficiency (or lack thereof) of capital markets and the Modern Portfolio Theory has implications for the asset management. The Capital Asset Pricing Model and Arbitrage Pricing Theory are important to portfolio management. The Value versus Growth issue will be examined in the context of portfolio theory. 3.9 Derivative Instruments, risk management and International Finance Options, futures, forward contracts, swaps and hybrid instruments are useful for hedging and have created challenges in management of risk and firm exposures. International finance is studied in relation to the investment and financing decisions of a firm operating in a global economy. 3.10 Strategic Managerial Accounting Management accounting information is used for decision-making, planning and control activities. It supports the operational and strategic needs of a firm by providing measures of a firm’s economic condition, such as the cost and profitability of a firm’s products, services and customers. Insightful cost analysis enables the firm to learn about its strategic focus and the long-term sustainability of its products, divisions and other activities. The focus is on activity based management, supply chain management, the balanced scorecard, benchmarking and cost estimation. 4. KEY ELEMENTS The course provides an integrated package built around a number of key elements, each of these supports and is supported by the other elements. No part of the programme stands alone and students are expected to participate fully in each. 3
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Financial Management Honours

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