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Financial Management: Course Outline

Financial Management course aims at imparting knowledge about the fundamental concepts and tools of financial management. It emphasizes the importance of financial management skills to individuals and enterprises.

Course Contents

An Overview of Financial Management

  • Scope of Financial management
  • Business organizations
  • Organization of the finance function
  • Finance management vs. other managerial functions
  • The finance manager and the financial environment
  • Financial markets
  • Financial institutions
  • The roles of the finance manager
  • Goals of the firm
  • Agency problems and their mitigation

Time Value of Money

  • The role and perspectives of the TVM concept
  • Future values
  • Present values
  • The relationship between future and present values
  • Annuities
  • Future and present values of cash flows under high compounding frequency
  • Impact of higher compounding frequency
  • Inflation and the Time Value of Money
  • Selected applications
  • Sinking fund
  • Providing for Retirement
  • Deferred Annuities
  • Loan Amortization

Bond and Their Valuation

  • Definition, types and features of bonds
  • Valuation of bonds (the basic process)
  • Basic relationships in bond valuation
  • Bondholder’s expected rate of return
  • Risks associated with bond returns

Stocks and Their Valuation Shares and their basic features

  • Benefits from a share investments
  • Price of ordinary shares
  • Behavior of expected dividend growth and share price
  • Price of shares based on earnings
  • Expected rate of return
  • Preferred shares and their characteristics
  • Price of preferred shared and the expected rate of return
  • Valuing the entire business

Risk and Return    

  • Expected returns and risk defined
  • Calculating expected return
  • Calculating risk
  • Portfolios and portfolio weights
  • Portfolio expected returns
  • Portfolio variance and standard deviation
  • Systematic and unsystematic risk
  • Diversification and portfolio risk
  • The principle of diversification and beta
  • Measuring systematic risk
  • Portfolio beta
  • Beta and the risk premium
  • Security market line
  • Capital asset pricing model

Analysis of Financial Statements

  • Ratio Analysis
  • Liquidity Ratios
  • Asset Management Ratios
  • Debt Management Ratios

Course Contents

  • Profitability Ratios
  • Market Value Ratios
  • Trend Analysis
  • Comparative Ratios and ?Benchmarking?
  • Uses and Limitation of Ratio Analysis

The Cost of Capital

  • The cost of capital concepts
  • Individual and weighted average costs of capital
  • Costs of capital and valuation
  • Capital structure
  • Capital structure decision (No taxes or other capital market imperfections)
  • Taxation and capital structure decision
  • Debt equity ratio, cost of capital and the value of the firm (The MM Propositions)
  • Optimal capital structure
  • Costs of financial distress and bankruptcy
  • The static trade-off theory
  • The pecking order theory
  • Personal taxes
  • Evidence on capital structure determinants

Working Capital Management an                 Short-Term Planning

  • Working capital defined
  • Working capital management policy options
  • Working capital cycle and other cash flows
  • Working capital dynamics
  • Cash management
  • Inventory Management

Long term Financing

  • The Capital structure basics
  • The capital structure questions
  • The Income and traditional views of capital structure
  • The Modigliani and Miller’s views under no taxes assumptions
  • The Modigliani and Miller’s views under corporate taxes assumption
  • Financing Decisions
  • The role and realities of Venture capital funding
  • Sources of funds for venture capital investments
  • Attracting venture capital finance and choosing a venture capitalist

The IPO process

  • Issuing methods
  • Choosing an underwriter
  • Role of the underwriter
  • Determining the IPO price
  • Underpricing of IPOs
  • Cost of IPOs
  • Benefits of listing and cross-listing

Types of long term debt

  • Main features of long term debt
  • Designing a long term debt issue
  • An overview of the debt market in Tanzania
  • International debt financing
  • Bond refunding analysis

Contemporary Financial Management Systems

  • Islamic Finance
  • Difference between traditional and Islamic finance
  • Islamic modes of financing
  • Other financial systems

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