Financial Management: Course Outline

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

• 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