University of Technology SydneyHandbook 2008

25746 Financial Management: Concepts and Applications

Faculty of Business: Finance and Economics
Credit points: 6 cp

Subject level: Postgraduate

Result Type: Grade and marks

Handbook description

This is an introductory subject in finance. It provides participants with an understanding of the tools and techniques used in financial decision making. The subject material is concerned with the investment and financing decisions of the firm. It provides a basis for subsequent integrative management subjects. It also examines the key areas of financial decision making such as risk and diversification, capital budgeting, cost of capital, short-term financing leasing and foreign exchange.

Subject objectives/outcomes

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

  1. Understand the role of accounting and financial information in the financial decisions that are critical to business survival. This is necessary to answer basic financial management questions such as what assets should a company buy? Or should the company raise finance through debt or equity?
  2. Use various analytical techniques essential to making informed financial management decisions; for example, net present value analysis.
  3. Explain some of the theoretical and practical difficulties of the analytical techniques used in the financial decision making process.

Contribution to graduate profile

This subject contributes to the degree by exposing students with limited work experience to the core principles of financial management. This is important since financial mismanagement is a leading reason for business failure. An understanding of financial management principles, is an essential ingredient in the development of a broad appreciation of business practices sought in a Masters program. This subject covers the key-learning gaol of the masters program of 'To enhance work-readiness expertise in a selected area of specialisation.'

Teaching and learning strategies

The subject will be taught using a combination of lecture seminar - workshops. These classes will be supplemented with both printed and electronic learning materials and resources. The UTS web-based communication tool (Blackboard Course Information) will be used to share information and encourage interaction between staff and students. Students will be encouraged to use appropriate computer software such as spreadsheets and word processors to complete assigned tasks.

Content

  • What is Financial Management? Introduction to financial statements, the goals of the firm, problems of agency and the risk-return trade off
  • Financial Statement Analysis and the Dupont System of Analysis
  • Time Value of Money including, Present Value, Future Value, Annuity and Perpetuity. Including the application to the valuation of Bonds and Shares
  • Capital Budgeting and alternative investment rules, analysis of lease vs buy decision
  • Risk and return for individual assets and portfolios, efficient market theory
  • Introduction to Debt and Equity, including the features of debt/equity and quasi Debt/Equity instruments, including an introduction to Options. Capital structure and the evaluation cost of funds
  • Foreign Exchange Markets and terminology including purchasing power parity/interest rate parity. Including calculation forward rates and hedges

Assessment

Mid Semester exam (Individual)30%
The mid semester exam is designed to assess students' understanding of the theories and concepts. Addresses objectives 1, 2 and 3.
Assignment (Group)20%
This will assess students' understanding of the concepts of capital budgeting in a practical application of the investment decision in finance. It will also allow students to demonstrate that they can use both spreadsheets and word processing packages to tackle practical valuation problems. Addresses objectives 1-3.
Final Exam (Individual)50%
This exam, consisting of multiple choice and short answer questions, will test students' understanding of the theory and their ability to apply the theory to financial management decisions. Addresses objectives 1-3.

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

Recommended text(s)

Ross, Thompson, Christensen, Westerfield, Jordan; (2007), Fundamentals of Corporate Finance, Fourth Australian Edition, McGraw-Hill/Irwin, Sydney

Faculty of Business (2007), Guide to Writing Assignments, Faculty of Business, University of Technology, Sydney.

Indicative references

Aungles, S.B. and Parker, S.R. (1998), Work: Organisations and Change, Allen and Unwin, Sydney.

Bishop, S.R, Crapp, H.R, Faff, R.W, and Twite, G.J; (2000), Corporate Finance, 4th Ed Prentice Hall, Sydney

Brealey, R.A. and Myers, S.C; (2003), Principles of Corporate Finance, 7th Ed McGraw-Hill, New York.

Brealey, R.A, Myers, S.C, Partington, G, Robinson, D; (2000), Principles of Corporate Finance, 1st Australian Edition, McGraw-Hill, Sydney.

Gitman, L.J and Madura, J; (2001) Introduction to Finance, 1st Edition, Addison Wesley Longman, New York.

Person, G, Brown, R, Easton, S, Howard, P, (2002) Business Finance, 8th Edition, McGraw-Hill, Sydney.