25300 Fundamentals of Business Finance

Subject level: Undergraduate

Handbook description

The subject develops an understanding of the core principles of financial management and their applications to financial decision-making. Topics include: an overview of the financial markets, time value of money, valuation of securities, risk-and-return and business finance, capital budgeting decisions and financing decisions. Skills in searching for financial information via the web and the use of computer packages are also developed.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. Understand the types of financial decisions and the role of the financial manager.
2. Understand the importance of the time value of money and how it is used to make informed business decisions.
3. Appreciate the role of risk and return when making business decisions.
4. Understand the importance of cash flow and how it is used in investment evaluation.
5. Comprehend the concept of optimal financial structure and the factors influencing its determination.

Contribution to graduate profile

The subject contributes to the Bachelor of Business learning goals. It exposes students to the issues and methodology for optimally allocating scarce financial and non-financial resources amongst competing alternatives. It gives students the opportunity to understand the core principles of financial management, their implications for decision-making in the business environment, and their significance in the relevant financial markets.

Teaching and learning strategies

The teaching strategies and learning materials for Fundamentals of Business Finance have been developed for a culturally diverse student body. They incorporate a range of strategies to provide students with flexible learning approaches. These strategies include face-to-face instruction, tutorial discussion, and self-managed learning materials in print and electronic forms. Students will use UTS web-based facility to access relevant information and to interact with staff and peers.

Content

• Business finance and objectives of the firm
• Business operating environment, financial markets and time value of money
• Introduction to capital market, valuation principle, debt and equity securities
• The role of the foreign exchange markets and options markets for business finance
• Risk-and-return tradeoff in financial decision-making
• Capital budgeting decisions: evaluation methods, cash flow analysis, incremental cash flows, issues in investment evaluation
• Financing decisions: sources of finances, financing mix, opportunity cost of capital, issues in capital structure choices

Assessment

The case study and the examinations assure the Bachelor of Business learning goals requiring students 'to understand methods of optimally allocating financial and non-financial resources amongst competing projects' and 'to have the ability to evaluate position and performance of corporate and non-corporate organizations.'

Examinations will be conducted under University examination conditions, and hence thoroughly address concerns regarding secure assessment. The case study will be secured through a combination of updating of assessment tasks across semesters and/or plagiarism detection software.

To pass the subject, students must achieve at least 50% of the final overall grade.

Recommended text(s)

Ross,Trayler,Bird,Westerfield & Jordan (2008) "Essentials of Corporate Finance" 1st Australian & New Zealand ed, McGraw-Hill

Indicative references

Bishop, S., Faff, R. Oliver, B. and Twite, G.(2004) Corporate Finance, 5th ed. Pearson/Prentice-Hall, Australia.

Frino A., Kelly S., Comerton-Forde C., Cusack T, and Wilson K. (2004) Introduction to Corporate Finance, 2nd ed. Pearson/Prentice-Hall, Australia.

Ross, S.A., Thompson, S.C., Christensen, M.J., Westerfield, R.W. and Jordan, B.D. (2004) Fundamentals of Corporate Finance, 3rd ed. McGraw-Hill, Australia.