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Financial Strategy

Pre-requisites

Completion of FACS (consider minimum mark)

Specific skills required from FACS:

  • Ability to calculate all investment appraisal methods (Payback, ARR, IRR, NPV)
  • Familiarity with financial statements and their functions:
    • The Statement of Financial Position
    • The Income Statement
  • Comfort with the concept that cash and profit are not the same
  • Ability to describe and calculate gearing (leverage)
  • Awareness of costing – absorption, marginal (including contribution), fixed, variable
  • Ability to construct budgets
  • Basic Microsoft Excel skills, specifically good discipline to create clear and auditable spreadsheets – this requires at least ONE licensed version of Excel per group.

Post-requisites

Completion of further reading on topics to facilitate the higher understanding required for Level 7 qualifications, as will need to be demonstrated via the PMA.

Introduction

The aim of this module is to provide broad guidance to answer two key questions:

1. Do I want to do this project; and
2. How will I pay for this project?

It concerns decision making and the financial implications of decisions from the extreme short term to the very long term. The module IS NOT designed to turn participants into corporate financiers but to enable them to understand some key concepts.

In business you need to understand the remit of your finance team; and that remit is not to tell you how to spend your money, but to ensure you have the funding you require to do the projects your company should be doing. In the alternative it should be telling you the financial constraints within which you have to work. The Finance team can give you data to aid your decisions, but your role is to make the decision. This course will aid you with that key skill, and explain to you how your finance team will frame its advice, and the concepts it uses to find the funds for you to do your projects.

Specific parts of the module also deal with introductory concepts concerning company valuation, capital markets (stock exchanges), mergers and acquisitions (including a simulation) and corporate solvency.

Objectives

On successful completion of this module participants will be capable of:

  • Selecting and justifying a project from different options via financial evaluation, calculation and appraisal.
  • Evaluate and compare the risk/reward balance for different companies
  • Critically appraising a business’ sources of, and use of funds
  • Examining the importance of broader issues in financial strategy, including non-financial considerations and secondary effects

Syllabus

An appreciation of corporate finance, and its links to operations within a business.

Understanding the types of cost and how they are relevant, or not, to an appraisal, including the sunk cost fallacy.

Investment Decision calculations from complex data sets

Framing of decisions and the effective use of quantitative and qualitative data in financial decision making

Non-financial matters.

Risk – mitigations, identification, classification

Business case derivation, presentation and challenge

The cost of financing, its sources and the interaction with ‘The City’

An appreciation of current affairs

An examination of why company controls fail

Methods of valuing a business

Mergers and Acquisitions

Assessment

Written 90 minutes examination (30% weighting)

4,000 words Post Module Assignment (70% weighting)

Duration

1 week, including 20 hours of lectures and 10 hours of tutorials