This module aims to develop the student’s understanding of financial management principles and techniques relevant to the financing and investment decisions within an organisation. It aims to provide students with knowledge and skills that can be used to value companies and to conduct financial planning in range of business sectors.
Sources of finance (20%)
Key features of the main sources of finance. The financing requirements of organisations depending on size etc.Equity - including forms of share issue, redemption and repurchase of shares; Loan capital - including mezzanine finance, junk bonds, eurobonds, warrants, convertibles, debentures and mortgages;Leasing (including sale and leaseback) and hire purchase;Invoice discounting and debt factoring;Bills of exchange and acceptance credits;Other sources of bank finance and internal sources of finance.Factors influencing choice of financing methods.The effect of financing decisions on risk, income and control.Finance and the small business.Government sources: grants, regional and national aid schemes and tax incentives.Nature and role of Venture Capital, Angel Investors etc.Preference Share CapitalAlternative sources of finance - crowdfunding etc.Off Balance Sheet Finance.
The valuation of company shares (35%)
Methods of valuing shares including: net asset basis; adjusted net asset basis; revenue multiples and profit metrics; earnings basis (with and without growth factors) discounted cash flow etc. Rationale using different methods of valuation. Assessing company performance and position as part of the valuation process. The impact of financial structure including the use of off balance sheet finance. Capital market impacts on the valuation of companies.
Financial planning (25%)
The principles of financial forecasting.Forecast pro-forma financial statements.Estimating financial requirements for business start-ups and existing organisations.The impact of make or buy decisions on cash flows and liquidity metrics.Consideration of the impact of tax (VAT and Corporation Tax) on financial plans.The impact of credit decisions on cash flows and financial performance and position.
Investment appraisal (20%)
The need for evaluation of long-term investment opportunities. Net present value.Internal rate of return.Accounting rate of return.Payback period (including discounted payback).Profitability index and capital rationing.Relevant and irrelevant cash flows.The impact of different forms of finance on investment appraisal.Taxation and investment appraisal.Lease or buy decisions; Make or buy decisions (leasing and outsourcing - their impact on metrics influencing the investment decision). Risk and uncertainty in project appraisal.Sensitivity analysis.Qualitative factors.
|Module Content & Assessment