SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

STUDY GUIDE:
Financial Management – University of Sunderland (3 credits)
Semester: Sept – Dec 2010

Lecturer: Mr. Lim Boon Keong, Deric

Faculty of Business, Accountancy

and Management

General guidelines
1. Classes are on Mondays, 12:15pm – 03:15pm.
2. Students arriving after 12:20pm will be marked as ‘Late’.
3. Students arriving after 12:45pm will be marked as ‘Absent’.
4. Students are allowed a maximum of 3 class absences.
5. Students who are absent from class for more than 3 times will be barred from
assessment.
6. The due date for the assignment is on WEEK 14 (20 Dec 2010).
7. All assignments are due on the day of the class on the due date week.
8. Late assignments will be given a penalty of -5% per day from the due date.
9. Any forms of disruptions when classes are in session are strictly prohibited.

Class Attendance and Participation

Students are expected to attend all classes and participate in class discussions. Each student
will also be expected to present and lead a discussion of one of the class exercises.

Weekly Overview

DELIVERY PLAN/SCHEME OF WORK

:: 1 ::
SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

SEGI UNIVERSITY COLLEGE – KOTA DAMANSARA, PJ

Faculty of Business, Accountancy & Management (FOBAM)

Subject/Course: Financial Management

Subject Code: UGB231

Semester Start Date: Week beginning 20 Sept 2010

Semester End Date: Week ending 25 Dec 2010

Lecturer: Mr. Lim Boon Keong, Deric – BBA, MBA (Finance)

Email address: bklim@segi.edu.my

You may download all studying materials from

http://sites.google.com/a/segi2u.my/dericlim/

Wee Actual Lecture Outline Learning Outcomes Student Remar

k Date s’ ks
Activity
1 20/09/2010 An Introduction to • Define finance, goal Tutorial 1
Financial of the firm and the
Management legal forms of
• Definition of business.
Finance • Explain the agency
• Goal of the Firm issue in finance.
• Legal Forms of • Explain financial
Business institutions and
• Other Forms of markets.
Business
• Agency Issue
• Financial
Institution and
Market
2 27/09/2010 Understanding • Review the Tutorial 2
Financial Statement, contents of Income
Taxes, and Cash Statement and
Flows Balance Sheet.
• Income • Apply ratios to
Statement analyze a firm’s
• Balance Sheet liquidity and
• Using Financial operating efficiency
Ratios • Discuss the
• Liquidity Ratios relationship between
• Operating debt and financial
Efficiency Ratios leverage and the
• Leverage Ratios ratios used to analyze
• Profitability a firm’s debt
Ratios • Apply ratios to
• Market Ratios analyze a firm’s
profitability and its
• Limitation of
market value
financial ratio
• Apply a summary
• DuPont Model
of financial ratios and
the DuPont System of
analysis
3 04/10/2010 Raising Capital in • Explain the Tutorial 3
The Financial concept of Financial
Markets Market and Institution
:: 2 ::
SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

• Types of • Explain the concept of

securities Efficient Market
• Movement of Hypothesis (EMH)
Savings
• Financial Market
Components
• Distribution
Methods
• Efficient Market
Hypothesis (EMH)
4 11/10/2010 The Time Value of • Discuss the role of Tutorial 4
Money time value in finance,
• The Role of Time the use of
Value in Finance computational tools,
• Single Sums and the basic
• Annuities patterns of cash flow.
• Mixed Streams • Explain the
• Compounding concepts of future
Interest More value and present
frequently than value, their
Annually calculation for single
• Special amounts, and
Applications of Time relationship between
Value them.
• Calculate the
future value and the
present value of both
an ordinary annuity
and an annuity due.
• Calculate both the
future value and the
present value of a
mixed stream of cash
flows.
• Apply the concept
of compounding
interest more
frequently than
annually has on
future value and on
an effective annual
rate of interest.
• Describe the
procedure involved in
(1) determining
deposits needed to
accumulate a future
sum, (2) loan
amortization
5 18/10/2010 Risk and Rates of • Explain the meaning Tutorial 5
Return and fundamentals of
• Interest Rates risk, return, and risk
and Expected preference.
Returns • Describe procedures
• Term Structure for assessing and
of Interest Rates measuring the risk of
• Risk and Return single asset.
Fundamentals • Discuss the
• Risk of a Single measurement of
Asset return and standard

:: 3 ::
SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

• Risk of a deviation for a

Portfolio portfolio.
• Risk and Return: • Explain the capital
The Capital Asset asset pricing model
Pricing Model
• Security Market
Line (SML)
6 25/10/2010 Valuation and • Describe the Tutorial 6
Characteristics of characteristic of the
Bonds bonds and types of
• Characteristics bonds.
of Bonds • Identify the key
• Types of Bonds inputs and apply basic
• Valuation model used in the
Fundamentals valuation process.
• Bond Valuation • Apply the basic
• Yield to Maturity valuation model to
(YTM) bonds and describe
the impact of required
rate of return and
time to maturity on
bond values.
• Explain yield to
maturity (YTM), its
calculation and the
procedure used to
value bonds.
7 01/11/2010 Stock Valuation • Discuss the Tutorial 7
• Common and characteristic and
Preferred Stock feature of common
• Preferred Stock and preferred stock.
Valuation • Apply preferred
• Common Stock and common stock
Valuation valuation.
• Decision making
and Common Stock
Value
8 08/11/2010 Capital Budgeting • Explain the role of Tutorial 8
Decision capital budgeting
Criteria/Techniques techniques in the
& Capital Budgeting capital budgeting
Refinements process.
• Decision-making • Calculate,
Criteria in Capital interpret and
Budgeting evaluate payback
• Payback Period period, net present
• Net Present value, profitability
Value (NPV) index and internal
• Profitability rate of return.
Index (PI) • Compare projects
• Internal Rate of with unequal lives.
Return (IRR)
• Applying RADRs
• Comparing
Projects with
Unequal lives
9 15/11/2010 Capital Budgeting • Calculate the Initial Tutorial 9
Cash Flows Investment.
• Evaluate Cash • Identify the relevant
Flows operating cash
:: 4 ::
SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

• Finding the inflows associated

Initial Investment with a proposed
• Finding the capital expenditure.
Operating Cash • Determine the
Inflows terminal cash flows
• Finding the with proposed cash
Terminal Cash flows.
Flows • Explain the concept
• Summarizing of capital rationing.
the Relevant Cash
Flows
• Capital
Rationing
• Project Ranking
10 22/11/2010 Cost of Capital • Explain the basic Tutorial
• An Overview of the concept, and the 10
Cost of Capital specific sources of
• Cost of Debt capital associated
• Cost of Preferred with the cost of
Stock capital.
• Cost of Common • Determine the cost of
Stock long term debt and
• The Weighted the cost of preferred
Average Cost of stock.
Capital • Calculate the cost of
common stock equity.
• Calculate the
weighted average
cost of capital
(WACC).
11 29/11/2010 Analysis and Impact • Explain the concept Tutorial
of Leverage of leverage 11
• Leverage • Explain operating,
• Operating financial, and total
Leverage leverage and the
• Financial relationship among
Leverage them.
• Combine/Total • Explain and apply the
Leverage concept of breakeven
• Breakeven analysis.
Analysis

12 06/12/2010 Dividend Policy • Explain the concept Tutorial

• Dividend of dividend. 12
Fundamentals • Describe the concept
• The Relevance of relevance of
of Dividend Policy dividend.
• Factors Affecting • Determine factors
Dividend Policy affecting dividend
• Types of policy.
Dividend Policies • Evaluate types of
• Other Forms of dividend policy.
Dividends
13 13/12/2010 Working Capital • Explain the concept Tutorial
Management of net working 13
• Net Working capital.
Capital • Discuss on cash
Fundamentals management,
• Cash account management
Management and inventory
:: 5 ::
SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

• Accounts management;
Receivable differing views and
Management techniques.
• Inventory
Management
14 20/12/2010 Revision Overall revision of the Revision
subject

:: 6 ::
SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

References and Reading Materials

Main Text

Stephen A.R, Randolph W.W, Bradford D.J (2008) Essentials of Corporate Finance, 6th Edition.
McGraw Hill

Additional Texts

Gitman, L.J. (2005) Principles of Managerial Finance 11th Edition, Addison-Wesley, USA

Keown A.R, et al. (2005) Financial Management: Principles and Applications 10th Edition,
Pearson Prentice Hall

Pike, R. and Neale, B. (2003) Corporate Finance and Investment: Decisions and Strategies, FT
Prentice Hall

Ross, S.A., Westerfield, R.W., and Jordan, B.D. (2003) Fundamentals of Corporate Finance 6th
Edition, McGraw-Hill

Journals/ Magazines/Newspapers

Journal of Finance
Fortune
Asian Business
Harvard Business Review
Time Magazine
The New straits Times

Online sources
Malaysia
• http://www.sc.com.my/
• http://www.bnm.gov.my/
• http://www.klse.com.my/
• http://biz.thestar.com.my/
• http://www.theedgedaily.com/

International
• http://www.asiamoney.com/
• http://www.ft.com/home/asia
• http://online.wsj.com/public/asia
• http://www.forbes.com/finance/
• http://www.bloomberg.com/index.html?Intro=intro3

You are required to use e-journals such as www.emeraldinsight.com to gain valuable

insights and knowledge.

:: 7 ::
SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

Course Description
The aim of the module is to introduce the basic concepts of Financial Management and as such
builds on many of the concepts that were introduced in the level one core module Accounting
for Business and Management (UGB102).

This will enable students to understand the relevance of financial management in helping to
implement strategy and to make business decisions. It will also help provide a context for
other modules, that the student might study on the programme.

It will help students to achieve the aims of the programme by providing a sound foundation in
financial management. It will also allow students to demonstrate an ability to work on their
own and to communicate effectively, both orally and in writing.

It is always preferable for students to have read the relevant chapters for each module from
the reading lists before attending the class in order to enjoy a more meaningful exchanges and
insights especially for the student activities and weekly discussions.

Assessment and Examination Information

Assessment: Courseworks
Weightage: 100%

Refer to coursework questions

Final Examination is NOT REQUIRED

Grading
Course grades will be based on the following work.

Individual Assignment 100%

Students are expected to submit the assignment, regardless of the weight allocated to the
overall assessment. Failure to submit the assignment work may lead to a FAILURE grade for
this module.

:: 8 ::
SEGi University College (Faculty of Business, Accounting and Management) - Study Guide

Assignment of Grades for Written Work

Written assignments will be graded according to the following distribution:

• 80%: Content (thoroughness of preparation, information, and content)

• 10%: Style (grammar, writing quality, clarity of writing at the sentence level)
• 10%: Presentation (organization, clarity of writing at the paper level)

Presentation Requirements
A Microsoft Office Word document
1” margin
1.5 line spacing
Arial (11 pt) or Times New Roman (12 pt)
Printed on A4 paper (Handwritten assignment will NOT be accepted)

Academic Dishonesty
As stated in the faculty Handbook, cheating, including plagiarism, will not be tolerated. All
written work, including paper summaries, must be your own work. If you wish to quote a
source, you must do so explicitly, and with proper attribution. Any "double dipping" that does
not meet the requirements set out above will be treated as a violation of the academic honesty
policy for the class, and dealt with accordingly.

The minimum penalty for a violation of the academic honesty policy is a zero on the
assignment. Other penalties may include a letter grade reduction, failing the class, or, in
extreme or repeated cases, dismissal from the program/college

:: 9 ::