Fundamentals of Financial Management

Curriculum guideline

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Course
FINC 2340
Discontinued
No
Course code
FINC 2340
Descriptive
Fundamentals of Financial Management
Department
Finance
Faculty
Commerce & Business Administration
Credits
3.00
Start date
End term
201720
PLAR
No
Semester length
15 Weeks X 4 Hours per Week = 60 Hours
Max class size
35
Contact hours
Lecture: 4 Hours Total: Hours
Method(s) of instruction
Lecture
Learning activities

Material will be presented within a lecture/discussion environment.

Course description
This course provides an introduction to the general theoretical and practical aspects of financial management as they apply to the profit-oriented business organization. Topics addressed include: a general introduction to finance, the financial environment, security valuation, cost of capital, valuing risky financial assets, capital budgeting, internal and external financing, working capital management, capital structure, interest and exchange rate analysis, corporate restructuring and financial planning.
Course content
  1. Financial Management
    • legal forms of organization
    • financial management, its evolvement and the role of the financial manager
    • main objectives/tasks
  2. The Financial Environment
    • tri-governmental influence
    • taxation
    • the financial system
    • national/international markets
    • specialized markets
    • capital market efficiency
  3. Security Valuation
    • time value of money, including compounding, discounting, general and complex annuities and amortization (brief review only)
    • sinking funds (review only)
    • the basics of valuation
    • bond and equity valuation
  4. Cost of Capital
    • the concept
    • determining factors and underlying assumptions
    • the mix
    • applications
  5. Capital Budgeting
    • cash flow determination (before and after tax)
    • non-discounted cash flow in capital budgeting decisions
    • discounted cash flow in capital budgeting decisions
    • applications
  6. Capital Budgeting Under Uncertainty
    • statistical measures of variability
    • methods for incorporating risk into CB
  7. Working Capital Management
    • general introduction
    • cash and marketable securities management
    • accounts receivable and inventory management
    • short-term financing (internal/external)
  8. Long-term Financing
    • general introduction
    • influencing factors
    • debt, including the mix available (an in-depth discussion)
    • equity, including the mix available (an in-depth discussion)
    • leasing, including lease versus buy
    • the underwriting process
  9. Capital Structure and Dividend Policy Decisions
    • analysis and impact of leverage
    • general capital structure theory and the financing mix
    • dividend policy
  10. Interest and Exchange Rate Analysis
    • the central banks of North America
    • determinants
    • significance for financial managers
  11. Corporate Restructuring
    • introduction
    • mergers and acquisitions
    • divestitures
  12. Financial Planning
    • as part of the business planning process
    • objectives
    • elements               
Learning outcomes

At the end of the course, the successful student should be able to:

 

  1. define and explain the roles and tasks of the financial manager;
  2. describe and differentiate between the main organizational forms available to the business enterprise;
  3. demonstrate a broad understanding of the financial environment within which the financial manager must operate;
  4. demonstrate a broad understanding of the concepts, principles and uses of cost of capital;
  5. demonstrate proficiency in the application of time value analysis knowledge to the practical valuation of risk-free assets and capital budgeting problems;
  6. explain the general determinants of common and preferred stock prices, as well as bond pricing;
  7. understand and compute the basic statistical measures of variability and demonstrate their general use in valuing risky financial assets;
  8. demonstrate a broad understanding of the concepts, principles and procedures associated with net working capital management;
  9. demonstrate a broad understanding of the concepts, principles, procedures and practices involved with debt and equity financing;
  10. demonstrate a broad understanding of the theory of capital structure and its impact on management decision-making;
  11. identify and explain the general determinants of interest rates and their relationship to foreign exchange rates;
  12. demonstrate a broad understanding of the concepts, principles and procedures associated with corporate restructuring activities;
  13. describe the key elements, objectives and benefits of the financial planning process.
Means of assessment
Term Examinations (2-3)         45%
Final Examination   30%
Assignments (8-12)   15%
Projects   10%
Total 100%
Textbook materials

Textbooks and Materials to be Purchased by Students

 

1.  Block, S.B. et al, Foundations of Financial Management, 2nd Cdn. Edition, Irwin, 1991.

2.  Business calculator - recommend Texas Instruments BA 35 or BA II+.

Prerequisites

ACCT 1210 and (BUSN 1330 or FINC 1231) (CSIS 1110 is highly recommended).