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The External Financial Environment

Introduction

To develop the knowledge and skills expected of a finance manager, in relation to investment, financing and dividend policy decisions. The module develops the financial and management accounting skills.

Objectives

Upon successful completion participants will be able to:

  • Critically discuss the role and purpose of the financial management function and the relationship between managers, shareholders and institutions.
  • Critically identify and evaluate alternative sources of business finance, including cost of capital calculations
  • Explain and apply risk management techniques to business
  • Critically assess and analyse the effect of currency fluctuations on business

Syllabus

The economic environment for business and the nature and role of financial markets and institutions

Corporate governance, Managers, shareholders and other stakeholders.

Sources of, and raising short-term finance, sources of, and raising long term finance, internal sources of finance and dividend policy, gearing and capital structure considerations, finance for small and medium sized entities

The concept of risk, its computation and recognition of unsystematic and systematic elements, the Markowitz model of optimum portfolios, portfolio theory, the inclusion of a risk free investment and the Capital Asset Pricing Model.

Sources of finance and their relative costs, estimating the cost of equity, estimating the cost of debt and other capital instruments, estimating the overall cost of capital, capital structure theories and practical considerations, the impact of the cost of capital on investments

Nature and purpose of the valuation of business and financial assets, models for the valuation of shares, the valuation of debt and other financial assets, the efficient market hypothesis and practical considerations of the valuation of shares

The nature and types of risk and approaches to risk management, causes of exchange rate differences and interest rate fluctuations, hedging techniques for foreign currency risk.

Assessment

In-module assessment - 30%

Reflective log (1000 words) - 20%
Coursework (3000 words) - 50%

Single consolidated mark returned by tutor after completion of the PMA

Duration

Contact hours: 30