Financial Management

Financial management is concerned with the decisions that a firm makes about investing in projects and with acquiring the finance for that investment and as such is only concerned with the future.

With a financial decision, the issue may not be whether it was right or wrong in predicting the future but whether an appropriate assessment and a reasoned argument were made in taking the initial decision. As we are dealing with uncertain future predictions, risk is a major factor to be taken into account. How likely is the prediction to happen?

This course will enable students with little knowledge of finance to lay the foundations for decision making in financial management.

Syllabus

Part One: The Investment Decision

Unit 1: Introduction to Financial Management

Section 1: Individual Consumption and Investment

Introduction

1.1 Consumer choice in a perfect market

1.2 Consumption-investment decision

1.3 Consumption, investment and the concept of utility

1.4 Wealth maximisation with borrowing and lending opportunities

Section 2: Fisher's Separation Theorem and Capital Market Efficiency

Introduction

2.1 Fisher's Separation Theorem

2.2 Capital market efficiency

2.3 Random walk concept

Section 3: Efficient Market Hypothesis

Introduction

3.1 EMH and financial management

3.2 EMH as 'bad science'

Unit 2: Capital Investment Appraisal

Section 1: Review of Capital Investment

Introduction

1.1 Capital budgeting decisions

1.2 Methods of capital investments appraisal

1.3 Time value of money

1.4 Internal rate of return

1.5 Computational and conceptual difficulties of IRR

1.6 Net present value

Section 2: Making Investment Decision

Introduction

2.1 Ranking and acceptance under IRR and NPV

2.2 Incremental IRR

2.3 Capital rationing and NPV

Section 3: Other Factors Affecting the Investment Decision

Introduction

3.1 Relevant cash flows

3.2 Capital budgeting and taxation

3.3 NPV and purchasing power risk

Section 4: Risk and Probability in Investment Decisions

Introduction

4.1 Uncertainty and investment appraisal

4.2 Concept of expected net present value

4.3 Standard deviation

4.4 Mean variance analysis

4.5 Certainty equivalent approach

4.6 Investment appraisal in practice

Unit 3: Working Capital Management

Section 1: Nature of Working Capital and its Management

Introduction

1.1 Objectives of working capital management

1.2 Structure of working capital

1.3 Accounting concept of working capital

1.4 Liquidity and accounting profitability

1.5 Working capital cycle

1.6 Operating efficiency

1.7 What happens in the real world

Section 2: Credit Management Strategies

Introduction

2.1 Credit management

2.2 Effective credit price

2.3 Effective discount price

2.4 Decision to discount

2.5 Opportunity cost of capital

2.6 Getting the right balance

2.7 Modelling the credit impact

2.8 Alternative credit policies and corporate profitability

2.9 What happens in the real world?

Part Two: The Dividend Decision

Unit 4: Equity Valuation, Stock Market Data and Investment

Section 1: Equity Valuation

Introduction

1.1 Capitalisation of dividends

1.2 Constant dividend valuation model

1.3 Dividend growth and capital gains models

1.4 Split growth in dividends

1.5 Equity value and capital gains

1.6 Estimating the growth rate in dividends

1.7 Earnings valuation models

Section 2: Interpreting Financial Ratios

Introduction

2.1 Dividend yield and PE ratio

2.2 Guide to stock exchange listings

Section 3: Corporate Investment Appraisal

Introduction

3.1 Cost of equity and investment appraisal

3.2 Taxation and the cost of equity

Unit 5: Dividend Decision and Valuation of Corporate Equity

Section 1: The Dividend Decision: Theoretical Considerations

Introduction

1.1 Dividend policy and equity value

1.2 Dividends as a passive residual

1.3 Shareholder preferences

1.4 Dividend irrelevancy hypothesis

1.5 Modigliani-Miller and the law of one price

1.6 Dividend policy under conditions of uncertainty: the Gordon Growth Model revisited

Section 2: Relevance and Reality of Dividend Policy

Introduction

2.1 Dividend policy and growth

2.2 Dividend policy and taxation

2.3 Clientele theory

2.4 Information content of dividend signalling

Part Three: The Finance Decision

Unit 6: Cost of Capital, Corporate Investment and Market Valuation

Section 1: Marketable Securities: Debentures

Introduction

1.1 Cost of debenture capital

1.2 Impact of taxation

1.3 Taxation lags and issue costs

Section 2: Alternative Sources of Finance and Capital Costs

Introduction

Section 3: Weighted Average Cost of Capital

Introduction

3.1 Defining a company's WACC

3.2 Assumptions underpinning WACC

3.3 Problems of estimating WACC in practice

Section 4: Shareholder Wealth and Capital Costs

Introduction

4.1 Shareholder wealth

4.2 MVA, EVA and free cash flow (FCF)

Unit 7: Financial Policy and Capital Structure

Section 1: Capital Structure and Gearing

Introduction

1.1 Capital structure, risk and investor returns

1.2 Capital structure and shareholder return

1.3 Capital gearing and the traditional view

Section 2: Capital Structure and Modigliani-Miller

Introduction

2.1 MM cost of capital hypothesis

2.2 Proposition I and the arbitrage process

2.3 Proposition I and market equilibrium

2.4 Proposition II and market equilibrium

2.5 Proposition III and market equilibrium

Section 3: MM in the Real World

Introduction

3.1 Rising cost of debt in a tax-less world

3.2 MM model, corporate taxation and value

3.3 MM formulation of capital costs with tax

3.4 Increasing costs of debt and bankruptcy in a taxed world

3.5 Personal taxation and the Miller model of general equilibrium

3.6 Brearley and Myers' reconciliation of debt and taxes

3.7 Market imperfection, behavioural theory and optimal

Part Four: The Portfolio Decision

Unit 8: Portfolio Decision and Risk Management

Section 1: Modern Portfolio Theory

Introduction

1.1 Development of modern portfolio theory

1.2 Combined risk of two investments

1.3 Correlation between two investments

1.4 Risk reduction, diversification and the correlation coefficient

Section 2: Minimising Risk: Portfolio Analysis

Introduction

2.1 Minimisation of risk for a two-asset portfolio

2.2 Finding the minimum variance of a two-asset portfolio

2.3 Multi-asset portfolio

2.4 The optimum portfolio

2.5 Significance of covariance terms

Section 3: Portfolio Analysis, Tobin, Risk and CAPM

Introduction

3.1 Market portfolio and Tobin's Separation Theorem

3.2 Systematic and unsystematic risk

3.3 Beta values and systematic risk

3.4 Traditional Capital Asset Pricing Model

3.5 Criticisms of the CAPM

3.6 Arbitrage Pricing Theory

3.7 Capital budgeting and CAPM

3.8 Estimation of project betas

3.9 Capital structure and the beta coefficient

3.10 Capital structure and the CAPM

3.11 Modigliani-Miller and the CAPM

For a more detailed syllabus on this course, click here

Sample Course Materials

Please click on the logo below to view a few sample pages of the course materials we provide. Whilst this is only a few sample pages, we do hope that it will give you some idea of the quality of the materials we provide. If you have anymore queries in relation to the course materials, please feel free to contact one of our friendly course advisors who will be more than happy to deal with any queries that you may have.

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Qualifications

On completion of your course, you will receive the dual award:

Award 1 is issued by Stonebridge Associated Colleges: Financial Management Diploma

Financial Management Diploma issued by Stonebridge Associated Colleges, to view a sample of the college’s award, please click here.

Award 2 is issued by our Awarding Body: Level 4 Financial Management Award

At the end of this course successful learners will also receive a Level 4 NCFE Award Certificate of Achievement. Our course has been accredited under our NCFE IIQ Licence and the course measurable learning outcomes have been benchmarked at Level 4 (using Ofqual’s Qualification and Credit Framework (QCF) level descriptors) to allow you to consider the depth of study, difficulty, and level of achievement involved.

This award has been designed by Stonebridge Associated Colleges to meet specific learners' or employers' requirements. Accreditation by NCFE is a guarantee of quality. It means that this learning programme has been scrutinised and approved by an independent panel of experienced educational professionals and is quality audited biannually by NCFE.

To view a sample of the NCFE Certificate of Achievement, please click here.

To view a sample of the NCFE Candidate Unit Summary, please click here.

What is NCFE

NCFE is the UK's longest established awarding body, recognised as a highly professional and responsive organisation, committed to maintaining excellent customer service and a friendly approach.

NCFE is recognised as an awarding body by the qualification regulators ('regulators') for England, Wales and Northern Ireland. The regulators are the Office of the Qualifications and Examinations Regulator (Ofqual) in England, the Department for Children, Education, Lifelong Learning and Skills (DCELLS) in Wales and the Council for Curriculum, Examinations and Assessment (CCEA) in Northern Ireland.

Accreditation by NCFE is a guarantee of quality. It means that the college has been inspected and approved by an independent and experienced education professional and is quality audited biannually by NCFE. The centre delivering the programmes has been licensed by NCFE on the basis of its own quality systems. At the end of an accredited course, successful learners will also receive an NCFE Award certificate of achievement.

For more information on this award, click here

Requirements for Entry

There is no experience or previous qualifications required for enrolment on this course. It is available to all students, of all academic backgrounds.

Study Options

In order to offer our students the most convenient and flexible distance learning courses, Stonebridge Associated College offers you the option to study for your course via two methods:

• 1. Via the traditional paper-based method.
• 2. Through the online method via ElearnUK.

If you do not have Internet access, or would prefer to study this course via the traditional paper/postal based study method, you can find more information on the course by clicking on the link below.

Stonebridge Prices

Studying by Post. If you would like to pay by instalments, we do offer an affordable interest free payment plan scheme which allows you to spread the cost of your course over a number of months. However, to use this option you will need to study for your course using the traditional paper-based method. For more information on our payment plans please visit our website at www.stonebridge.uk.com

The reason why the course fee is less if you choose to study online, is because with online study there are no costs associated with postage and printing etc. and thus we are able to offer the course at a reduced rate.

The total amount payable over the term's period, is no more than the total cash price of the course.
(APR = 0%). Written quotations are available on request.

Study Hours

This is only an approximate figure and is dependant upon how much time you can dedicate to your studies and how well you grasp the learning concepts in the course material. Furthermore, at the end of each lesson there is a question paper that needs to be completed and returned to your tutor. You should allow at least 1 - 2 hours of study to complete each question paper.

The approximate amount of time required to complete the course is: 120 hrs.