Financial Management (EBMV301)

PURPOSE

The overall module objective is to acquire the applicable knowledge, understanding and application possibilities of contemporary views with regard to fundamental financial management problems and decision-making areas. The key financial management areas are investment, financing and dividend decisions, where financial decision-making is evaluated according to the criterion of maximum shareholder wealth.

LEARNING OUTCOMES

• Understand what corporate finance as well as the basic accounting statements entail.
• Demonstrate an understanding of how a firm can use financial statements, using ratio analysis, to make long-term financial decisions.
• Apply the basic principles of long-term financial planning to determine the external finance needed.
• Understand the underlying principles of time value of money and the fundamental concepts related to the discount cash flow valuation.
• Conduct bond and share valuations for firms.
• Apply the methods and techniques which a firm can use to evaluate alternative investment opportunities in the capital investment decision-making process to make calculated capital budgeting decisions.
• Demonstrate insight into capital market history of South Africa and risk-return trade-off facing South African investors and financial managers.
• Calculate a firm’s or a project’s cost of capital.
• Determine a firm’s optimal capital structure.
• Identify the factors which affect a firm’s dividend decisions and evaluate different dividend policies.
• Understand the pertinent issues associated with short-term finance and planning.
• Demonstrate insight into the management of a firm’s current assets.

CORE CONTENT

• Introduction to financial management:
• An overview of financial management.
• The financial environment: markets, institutions, interest rates and taxes.
• Financial forecasting, planning and control:
• Analysis of financial statements.
• Financial planning and control.
• Essential concepts in financial management:
• Risk and required returns.
• Time value of money.
• Valuation of the firm.
• Capital budgeting:
• Project cash flows and risk.
• Capital budgeting decision criteria.
• Required rates of return, leverage and dividend policy:
• Cost of capital: The required rate of return for capital investments.
• Capital structure.
• Dividend policy.
• Management of working capital:
• Working capital policy.
• Managing short-term assets and liabilities.

Evaluation criteria

100% Continuous assessment:

• 2x Semester tests (Final mark weight = 30%)
• 2x Assignments (Final mark weight = 20%)
• 2x Tutorials (Final mark weight = 10%)
• End of module assessment (Final mark weight = 40%)

MODERATION

Internal and external.

Prerequisites

• Introduction to the Business Functions (EB122)
• It is strongly recommended that students wishing to register for EBMV301 must, prior to registering for this module, have passed the Accounting 1st year modules and the Statistics 1st year modules. If students wishing to register for EBMV301 did not pass these modules, it is recommended that they register for these modules concurrently.

Evaluation criteria

100% Continuous assessment:

• 2x Semester tests (Final mark weight = 30%)
• 2x Assignments (Final mark weight = 20%)
• 2x Tutorials (Final mark weight = 10%)
• End of module assessment (Final mark weight = 40%)