The course is aimed at exposing students to the Investment functions, Current Assets, Cash, Receivables, Fixed Assets, Purchasing, Hire Purchases Leasing, The Financial functions: Capital structure, Capital market theory, costs of capital, The Dividend Function: Declaration, Long-term policy decision stock or reverse splits of finance. Tools of Financial control: Ratio analysis fund flows, simulation, budgeting. International Aspects of Finance.
Course Content
Indicative Content
Introduction: Overview of Finance Management and Mathematics of finance.
Management of assets: Management of fixed assets, Capital budgeting, Management of cash and marketable securities, management of accounts receivables, management of inventory.
Management of sources of funds: Management of short term sources of funds, Management of intermediate sources of funds, management of long term sources of funds, cost of capital. Management of earnings: The dividend question, setting dividend policy
Tools and techniques of financial planning and analysis: Cash budget and financial plans, ratio analysis, funds flow analysis, break even analysis.
Managing financial distress: Nature and causes of financial distress, Schemes to address financial distress.
Financial Environment: The finance function and its contribution to business, objectives; corporate governance and agency theory, general macro-economic factors that impact upon financial goals and strategies; ethical issues facing finance manager.
Financing: Sources of finance; finance mix; long term vs. short term funds; internal vs. external funds, factors influencing a company's choice of funds; characteristics, benefits, limitations, appropriateness, availability and risk profile of sources of finance; procedure of raising funds; Terms and conditions associated with each source; issues SMEs facein raising finance; managing relationships with fund providers; venture capital funds; due diligence processin fund raising.
Determining Financial Requirement of a Business: Company's financial requirements and optimal asset mix; ratio analysis to determine financial position and performance of a company from the perspective of fund raising; Calculation of free cash-flow; Key issues in company's position/performance relevant to borrowing and rising of funds.
Investment Decisions: Investment Appraisal: Techniques; Risk and return, Capital rationing, Consideration of inflation, uncertainty and probability; non-financial factors; financing options, costs and benefits.
Working Capital Management: Working capital, Working capital cycle; inventory management, Debtors management, Creditors management, Cash management; short, medium and long-term funding requirements and strategies to address the same.
Cost of Capital: Appropriate discount rate; Determination of cost of funds from each source, Calculation of WACC using dividend valuation model and capital assets pricing model; Application and limitations of WACC.
Capital Structure: Factors influencing capital structure, Mix of equity and debt; impact of varying gearing levels; Capital structure theories including relevancy theory, Modigliani Miller's irrelevancy theory, pecking order theory-assumptions, impact and limitations; Portfolio theory and the Efficient Market Hypothesis;
Dividend Policy: Factors influencing dividend decisions; dividend policy theories: Relevancy theory, irrelevancy theory, residual theory, clientele effect, information signalling; Dividend distribution; Bonus shares and share repurchase.
Mergers, Acquisitions and Takeovers: Meaning of Mergers, Acquisitions and Takeovers, Forms of Mergers, Acquisition and Takeovers, Benefits to businesses; financial treatment for deals, Payment and settlement of deals.
- Module Team: Dr Daniel Twesige