| School: School of Marketing Module Author: Module Description: Financial Analysis has close links with modules encountered earlier in the programme such as Economics, Quantitative Methods and Financial Decision Making. The module aims to equip the Retail & Services Management student with the requisite tools to analyse capital investment projects undertaken by the firm in a rigorous manner; to have a solid understanding of the procedure to be followed in preparing projected financial statements and to become familiar with the CAPM. The module also deals with the substantive areas of cost of capital, mergers & acquisitions and dividend policy. Marketing students need to be fully cognisant of the most extensively used investment appraisal techniques in order to be able to determine the financial viability of a wide array of marketing projects, such as new product development or expansion into new geographic markets. Coupled with a solid framework for analysing investment proposals, the Marketing student also requires a basic understanding of how such investments will be funded and the impact of taking on a certain project on the firm as a whole, including its impact on the risk profile of the firm. |
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| Module aim: The module aims to give the student a working knowledge of how the firm chooses between competing projects, how it finances the projects undertaken and how the outcome of these investment and financing decisions impacts on the firm’s valuation. |
Corporate Governance: A detailed analysis of Corporate Governance regulations and its implications for firms, paying special attention to Asymmetric Information and its effects in corporate boards.
Investment Appraisal Techniques and Applications: In-depth examination of capital budgeting techniques including NPV, IRR, MIRR and Profitability Indices. Incorporate risk into investment appraisal – risk-adjusted discount rates and probability analysis. Incremental cashflow analysis, replacement decisions and capital rationing. Sensitivity analysis and scenario analysis.
Financial Planning: Planning for the future. Preparing projected financial statements. Forecasting sales, costs and balance sheet items. Importance of projected cash flow statements.
The Cost of Capital: Familiarisation with the CAPM and the uses of the model in financial management. Operating gearing and financial gearing. Measurement of debt capacity. Cost of equity using the CAPM and dividend valuation models, cost of redeemable and irredeemable debt, tax shield on debt. Calculating WACC. Relevance of cost of capital for unlisted companies and public sector organisations. Estimating the international cost of capital using the CAPM.
Mergers and Acquisitions: Arguments for and against M&A activity. International M&A activity. Estimating the value of potential target companies – earnings based valuation methods and asset based valuation methods. Methods of financing M&A transactions. Defences against take-overs.
Dividend Policy: Importance to shareholders of a consistent dividend policy. Practical influences on dividend policy. Dividends as signals of future prospects. Dividend irrelevance hypothesis.
The key strands in the learning strategy are a series of lectures, which are supported by extensive material downloadable from the intranet site. Articles which are pertinent to the material being covered in the lecture series will also be available on the intranet site for students to peruse in their own time
| Module Content & Assessment | |
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| Assessment Breakdown | % |
| Formal Examination | 60 |
| Other Assessment(s) | 40 |