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

Assessment item 1: Case Study (Group)

Assessment item 2: Mid-semester Exam (Individual)

Assessment item 3: Final Exam (Individual)

Recommended text(s)

Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield, Jordan, First Edition, McGraw-Hill, 2008 (referred to as 'Ross')

Resources Book — the Resources Book contains the lecture notes and tutorial questions. It is available at a printing cost recovery price. City students may purchase their copy from the Haymarket UTS Union Shop (Building 5D). Kuring-gai students may purchase their copy from the UTS Union Shop (Union Centre, Level 5, Building 1). Alternatively, if you prefer do your own printing, the material is also available on UTSOnline.

Indicative references

Gitman LJ, Juchau R, Flanagan J, Principles of Managerial Finance, Fourth Edition, Pearson/Addison Wesley, 2005

Peacock R, Martin P, Burrow P, Petty JW, Keown AJ, Scott DF, Martin JD, Financial Management, Fourth Edition, Prentice Hall, 2006

Ross SA, Thompson AC, Christensen MJ, Westerfield RW, and Jordan BD, Fundamentals of Corporate Finance, Fourth Australian Edition, McGraw Hill, 2008

Terry, Hutcheson, Hunt; Introduction to the Financial System, First Edition, Nelson, 2000

Other resources

A calculator is required in this subject. We recommend that you purchase a financial calculator.