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International Financial Management
University of Westminster
Accounting and Finance Fundamentals
Module Code: 2FIN591
Module Leader: Dr. A Benamraoui
Summary of Module content: This module is designed to develop students understanding of Financial Management themes. It covers a series of topics on investment decisions and their financial implications as investment and corporate finance decisions interrelate and cannot be separated. It will provide students with a broad knowledge to appraise, from a both domestic and international perspective, financial management strategies and risk limitation techniques in making commercial value added decisions.
1. Identify, interpret and evaluate the impact of varying capital structure on the overall cost of capital of a firm;
2. Demonstrate and apply shareholder value analysis (SVA) modelling technique;
3. Assess potential investment decisions such as corporate expansion and reorganisation strategies from a financial perspective;
4. Develop students’ analytical skills of value, risk, capital budgeting, capital structure and other topics related to financial management within a firm;
5. Explain, develop and recommend suitable risk management techniques in both domestic and global financial management context;
6. Demonstrate the significance of treasury management and corporate dividend policy.
On completion of this module students should be able to:
Module Outline Booklet - Strategic Financial Management (2FIN511)
1. Be conversant with the theoretical discussion underpinning a company’s capital structure debate and determine a company’s weighted average cost of capital;
2. Have an insight on how to use corporate finance techniques in making financial decisions;
3. Apply and develop broad financial analytical skills for evaluating corporate expansion and reorganization strategies and be able to explain efficient market hypothesis (EMH) and SVA model;
4. Identify, interpret and apply broad risk management techniques in the context of both domestic and international financial management;
5. Critically demonstrate an understanding of the role of a company’s treasury function in the current commercial environment.
Indicative syllabus content:
1.Investment Appraisal: Investment techniques (such as payback period, net present value and internal rate of return), investment valuation and capital rationing.
2. Cost of capital: cost of equity (CAPM & DGM), cost of debt, the weighted average cost of capital (WACC) and capital structure theories.
3. EMH, SVA and valuations: for acquisitions/mergers & corporate reorganisation (such as divestments, buy-outs/buy-ins & share repurchases).
4. Financial risk management: identification and appraisal of interest rate and foreign exchange risk, hedging risks using forwards, futures, options, swaps, FRAs and other financial derivative products.
5. Role of Treasury function: centralised versus decentralised, methods of financing short and long term investment and dividend policy (influences and effect on company value).
Teaching and Learning Methods:
The teaching/learning strategy for this module has been designed to ensure that the programme level learning outcomes outlined above have been acquired. The delivery of this module will draw upon two main different learning approaches: Lectures and Seminars. The lectures will provide students with key opportunities to develop their “critical thinking” of the financial management themes and to impart the subject specific knowledge on financial strategies and concepts. Topics will be covered in a structured way. Seminars will be used to reinforce various financial strategies and concepts highlighted in the lecture by using problem based-learning approach. Problem solving and mini-case scenarios, to be done in groups and individually, will be given out in advance.
Students are encouraged to raise questions during the lectures and to discuss openly the theories of financial management. The lectures are also intended to provide you with the framework to guide you in your independent study and to reinforce your understanding of the theories of modern corporate finance. All topics covered in the class can be included in the final exam. Students are asked to read the relevant chapters of both the essential and recommended textbooks, to take notes during the lecture, to solve seminars questions and to explore the recent financial events by reading the Financial Times, the Banker and the Economist. Students will have to practice other questions from the recommended texts to acquire the necessary skills and develop the level of understanding needed to complete this module. They should therefore devote sufficient private study time in addition to the programmed formal lecture and seminar sessions.
Unauthorised recording of the lecture and seminar by mechanical or electronic methods is not allowed.
Financial Management is a challenging subject that can be only be mastered with clear understanding of its concepts. It is essential that students have an insight into each topic before proceeding to the next one. The topics of Financial Management are interrelated and should be used as an integrated part to make an informed financial decision.
As part of the programme for this module there will be a guest speaker from the financial services industry and a visit to one major financial institution in the city of London.
The purpose of the end-of-module examination is to assess a student’s individual ability to determine their wider knowledge to identify, interpret, critically analyse, evaluate and justify the optimum financial strategies to a range of short questions and mini case scenarios. Exam format will be needed to mobilise possible modular exemptions from certain professional bodies. The exam is expected to test all the learning outcomes 1 to 5 as set out above.
Assessment Methods and Weightings:
The module will be assessed by end-of-module examination, 2¼ hour long, with circa 5 compulsory questions in Section A and a choice of two out of three to be answered from Section B representing 100% of the total module mark.
Section A (circa 50 marks) will include short questions, comprising a mixture of computational and discursive elements. These questions will test students’ ability to illustrate their ability to apply the fundamental knowledge of financial strategies both from a domestic and global context. This section will cover the syllabus at large. Section B (remaining 50 marks) will consist of three mini case scenarios from which students will be required to attempt two questions. These elective questions will focus on testing students’ ability to interpret, analyse and develop strategies on topical key areas of the syllabus for making suitable recommendations. These questions will therefore require the students to illustrate their ability in handling a quasi business financial strategy problem and devising an optimum solution.
Pike R & Neale B (2006). Corporate Finance and Investment: Decisions and Strategies (5th edition) FT Prentice Hall. ISBN-13: 9781408207352.
Arnold G (2008). Corporate Financial Management (4th edition). Pearson Education Limited. ISBN-13: 9780273719069.
Kale J R & Shahrar H (2007). Corporate Capital Structure and the Characteristics of Suppliers and Customers. Journal of Financial Economics, Vol. 83(2), pp. 321-365.
Ross S, Tayler R, Bird R, Westerfield R & Jordan B (2007). Essentials of Corporate Finance (1st edition). ISBN-10: 0074716700.
Vishwanath S R (2007). Corporate Finance: Theory and Practice (2nd edition). ISBN: 81-7829-649-4.
Watson D & Head A (2007). Corporate Finance: Principles & Practice (4th edition). Financial Times Press. ISBN-10: 0273706446.
Emery D R, Finnerty J D & Stowe J D (2008). Corporate Financial Management: International Edition (3rd edition). Pearson Education Limited. ISBN-13: 9781405847049.
Koller T, Coedhart M & Wessels D (2005). Valuation: Measuring and Managing the Value of Companies (4th edition). McKinsey & Company. ISBN: 978-0-471-70221-4.
Brealey R, Myers S and Allen (2003) Principles of Corporate Finance (international edition) McGraw-Hill Higher Education.
Mayers S (2001). Capital Structure. Journal of Economic Perspectives, Vol. 15(2), pp.81-102.
Pereiro, L E (2006). The practice of investment valuation in emerging markets: evidence from Argentina. Journal of Multinational Financial Management, 16, pp. 160-183.
Plenborg, T (2002). Firm valuation: comparing the residual income and discounted cash flow approaches. Scandinavian Journal of Management, 18, pp. 303-318.
Journal of Multinational Management
Financial Management Journal
Journal of Portfolio Management
Financial Analyst Journal
Journal of Corporate Finance
Journal of Business Finance and Accounting
European Finance Review
The Investors’ Chronicle
The Financial Times www.FT.com
The London Stock Exchange www.londonstockexchange.com
Datastream & Thompson Financial www.datastream.com
World Bank www.adb.org
The Financial Times & Investors Chronicle: Regularly contains articles that are relevant to the main themes covered in this module. Their web site should be visited. It is available at a oncessionary student rate and you are encouraged, and expected, to take advantage of this offer.
The main books, which are available from the University bookshop, contain most of the areas covered by the module. There are other equally valid and acceptable books available and reading references for some of these are given in the programme. Additional reading will be required, nd is expected and necessary.
Students are also expected to refer to articles contained in the business, accounting and financial journals in the library. Students should also make full use of all the other facilities available hrough the University's library and computing services.
The use of a financial/business calculator will help in many of the calculations, and is a recommended purchase.
Abbreviations used in reading list:
AG = Arnold, G. (2008) Corporate Financial Management (4th Edition) Pearson Education Limited – ISBN-13: 9780273719069.
P&N = Pike R & Neale B (2006) Corporate Finance and Investment: Decisions & Strategies (5th Edition) FT Prentice Hall Europe – ISBN-13: 9781408207352.
W&H = Watson D & Head A (2007). Corporate Finance: Principles & Practice (4th edition). Financial Times Press. ISBN-10: 0273706446.
M&W = Mills R & Weinstein B article on “Calculating shareholder value in a turbulent
MRW = Mills R, Robertson J & Ward T article on “Why financial economics is vital in
measuring business value”
R&Z = Rajan, R & Zinglas, L on “What do we know about capital structure? Some
evidence from international data. Journal of Finance, Vol, 50, pp. 1421-1460.
Module Outline Booklet - Strategic Financial Management (2FIN511)