GREAT ZIMBABWE UNIVERSITY
MUNHUMUTAPA SCHOOL OF COMMERCE
DEPARTMENT OF ACCOUNTING AND INFORMATION SYSTEMS
MODULE CODE: AC419
MODULE NAME: FINANCIAL MANGEMENT
CONTACT HOURS: 48 HOURS
MODULE OUTLINE
OBJECTIVES:
This module seeks to:
- Build understanding of the central ideas and theories of modern finance.
- Develop familiarity with the analytical techniques helpful in financial decision
making.
- Furnish material relevant for understanding the environment in which financial
decisions are taken.
- Discuss the practice of financial management.
MODULE CONTENT
1.0 FINANCIAL MANAGEMENT: AN OVERVIEW
1.1 Forms of Business Organisations
1.2 Financial Decisions in a firm
1.3 Goal of Financial Management
1.4 The Fundamental Principle of Finance
1.5 Building Blocks of Modern Finance
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1.6 Agency Problem
1.7 Business Ethics and Social Responsibility
1.8 Organisation of the Finance Function
1.9 Relationships of Finance to Economics and Accounting
2.0 TECHNIQUES OF CAPITAL BUDGETING
2.1 Capital Budgeting Process
2.2 Project Classification
2.3 Net Present Value (NPV)
2.4 Benefit – Cost Ratio
2.5 Internal Rate of Return (IRR)
2.6 Modified Internal Rate of Return (MIRR)
2.7 Payback Period
2.8 Accounting Rate of Return
2.9 Investment Appraisal in Practice
3.0 ESTIMATION OF PROJECT CASH FLOWS
3.1 Elements of the Cash Flow Streams
3.2 Basic Principles of Cash Flow Estimation
3.3 Cash Flows for a Replacement Project
3.4 Biases in Cash Flow Estimation
4.0 COST OF CAPITAL
4.1 Cost of Debt and Preference
4.2 Cost of Equity
4.3 Weighted Average Cost of Capital
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4.4 Weighted Marginal Cost of Capital
4.5 Determining the Optimal Capital Budget
4.6 Divisional and Project Cost of Capital
4.7 Floatation Cost and the Cost of Capital
4.8 Factors Affecting the Weighted Average Cost of Capital
4.9 Misconceptions Surrounding Cost of Capital
5.0 MARKET EFFICIENCY AND FINANCING DECISIONS
5.1 Financing Decisions versus Investment Discussions
5.2 Random Walk and Search for Theory
5.3 What is An Efficient Market?
5.4 Empirical Evidence
5.5 An Alternative Paradigm: The Behavioural Finance View
5.6 Implications for Corporate Finance
6.0 WORKING CAPITAL POLICY
6.1 Factors Influencing Working Capital Requirements
6.2 Current Assets Financing Policy
6.2 Current Assets Financing Policy
6.3 Operating Cycle and Cash Cycle
7.0 CASH AND LIQUIDITY MANAGEMENT
7.1 Long-term Cash Forecasting
7.2 Reports for control
7.3 Cash Collection and Disbursement
7.4 Optimal Cash Balance
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7.5 Investment of Surplus Funds
7.6 Cash Management Models
8.0 CREDIT MANAGEMENT
8.1 Terms of Payment
8.2 Credit Policy Variables
8.3 Credit Evaluation
8.4 Credit Granting Decision
8.5 Control of Accounts Receivables
9.0 INVENTORY MANAGEMENT
9.1 Need for Inventories
9.2 Order Quantity – EOQ Model
9.3 Order Point
9.4 Monitoring and Control of Inventories
9.5 Criteria for Judging the Inventory System
10.0 DEBT ANALYSIS AND MANAGEMENT
10.1 Risk In Debt
10.2 Rating of Debt Securities
10.3 Design of Debit Issues
10.4 Innovations in Debt Securities
10.5 Securitisation
10.6 Bond Covenants
10.7 Bond Refunding
10.8 Duration
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10.9 Term Structure of Interest Rates
11.0 LEASING HIRE – PURCHASE AND PROJECT FINANCE
11.1 Types of Leases
11.2 Rationale for Leasing
11.3 Mechanics of Leasing
11.4 Operating Leases
11.5 Leasing as a Financing Decision
11.6 Hire Purchases Arrangement
11.7 Choice between Leasing and Hire Purchase
11.8 Project Finance
INSTRUCTIONAL APPROACHES:
Lectures, tutorials, group presentations.
ASSESSMENT
Continuous Assessment: 25%
Examination 75%
RECOMMENDED TEXTS
1. Chandra P (2003) Financial Management: Theory and Practice 9th Edition, New Delhi,
McGraw-Hill
2. Weaver C.W. and Weston F. (2011) Strategic Financial Management: Application of
Corporate Finance, 3rd Edition, New York, McGraw-Hill
3. Anorld G(2012) Corporate Financial Management, 3rd Edition, New York, Financial
Times Publisher
4. Emry D.K. (2011) Corporate Financial Management, 3rd Edition, London, Prentice Hall
EXPECTATIONS
Students are expected to attend all lectures
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ACADEMIC INTEGRITY
Students must uphold the University policy on academic integrity. Every student must
familiarise himself/herself with this policy particularly section on academic misconduct,
plagiarism and cheating.
USE OF ELECTRONIC DEVICES
Students should put all their cell phones on silent mode or keep them switched off during
lectures.