| Short Title: | Financial Management 2 |
|---|
| Full Title: | Financial Management 2 |
|---|
| Description: | This module aims to develop the student’s understanding of financial management principles and techniques relevant to the financing and investment decisions within an organisation. It aims to provide students with knowledge and skills that can be used to value companies and to conduct financial planning in a range of business sectors. |
|---|
| Learning Outcomes: |
|---|
| On successful completion of this module the learner will be able to | - Demonstrate an understanding of the concept of the time value of money and bond valuation and their effect on investment decisions
- Calculate a range of company valuations using appropriate models and techniques that will incorporate the critical success factors distinguishing high performance organisations from others
- Understand the importance of dividend policy and the cost of capital and their effect on the dividend and financing decision respectively
- Use suitable analytical tools for the purpose of research into the appraisal of capital investment projects in a variety of business and management contexts
- Apply the techniques of financial forecasting for company-wide planning purposes using both quantitative and qualitative sources of information
- Understand foreign exchange risk and techniques to manage such risk
|
Module Content & Assessment| Content |
|---|
The time value of money: (5%) Simple interest
Compound interest
Discounting and present value
Nominal and effective rate of interest
Fixed versus variable rates of interest
Continuous streams of payment Bond valuations: (5%) Features of a bond
Fixed coupon and fixed redemption date bond
Bond yields
Pricing a bond
Deriving the gross and net redemption yield
Calculating the gross and net income yield Share and company valuations: (20%) Share value and cash flow
Zero growth
Constant growth stocks
Non-constant or supernormal growth
Price earnings method
Valuation using the balance sheet
Valuation using free cash flow The cost of capital and capital structure: (20%) Cost of different sources of finance
The Financing Decision
Equity
Debt
Weighted average cost of capital
The importance of choice in Capital structure
Theories on gearing
The traditional approach to capital structure
Modigliani and Miller – The effect
of Capital structure
Pecking order theory
Practical factors affecting capital structure Dividend policy: (10%) Dividend payment sequence
The dividend policy debate
Resolutions to the dividend controversy
Dividends as a residual of profit
Dividend stability
Factors affecting dividend policy Investment appraisal: (20%) Evaluation of long-term investment opportunities through the use of
Net present value
Internal rate of return
Accounting rate of return
Payback period (including discounted payback)
Profitability index and capital rationing
Relevant and irrelevant costs
Inflation and investment appraisal
Taxation and investment appraisal
Risk and uncertainty in project appraisal
Sensitivity analysis
Qualitative factors
Mutually exclusive and unequal life projects
Lease or buy decisions Long term financial planning: (15%) Financial forecasting
Forecast pro- forma financial statements
Additional financial needs
Lumpy assets
Maximum internal growth rates
Maximum sustainable growth rates
Accounting based management
Economic value added Foreign Exchange Risk: (5%) Exchange rates
Risk and foreign exchange
Managing foreign exchange exposure
Forward exchange contracts
Hedging using the money markets
|
| Assessment Breakdown | % |
|---|
| Course Work | 30% | | End of Semester Formal Examination | 70% |
| | Outcome addressed | % of total | Assessment Date |
|---|
| Formal End-of-Semester Examination | None | 70% | Semester End |
|---|
| Coursework Breakdown |
|---|
| Type | Description | Outcome addressed | % of total | Assessment Date |
|---|
| Continuous Assessment | The continuous assessment will take the form of a group/individual research project (incorporating qualitative and quantitative research, report writing skills, and referencing skills). This may include a presentation based on a group research project, where students will be given a group and individual mark. | | 30 | n/a |
IT Tallaght reserves the right to alter the nature and timings of assessment Module Workload & Resources| This course has no full time workload. |
|---|
| Resources |
|---|
| Required Book Resources |
|---|
- Denzil Watson and Anthony Head, Corporate Finance Principles & Practice, Latest Ed., FT Prentice Hall
| | Recommended Book Resources |
|---|
- Power, T., Walsh S., O’ Meara P, Financial Management: an Irish Text, Latest Ed., Gill & McMillan ACCA
- Diploma in Financial Management, Financial Strategy and Risk Management, BPP Professional Education Publications.
- Samuels, J.M., Wilkes, F.M., Brayshaw, R.E, Management of Company Finance,, Latest Ed., Chapman & Hall.
- Weston, J.F., Copeland, T.E, Managerial Finance, Latest Ed., Cassell
- Brett, M, How to Read the Financial Pages, Latest Ed., Random House Business Books
- Pinches, G.E, Essentials of Financial Management,, Latest Ed., Harper Collins
| | Required Article/Paper Resources |
|---|
- Journals, Magazines, Newspapers and Electronic Sources of information on issues relevant to Financial Management. n/a
|
|
