Financial Management Syllabus

CONTENT
Overview of financial management-

·         Nature and scope of finance-

·         Role of finance manager.-

·         Finance functions-

·         Goals of the firm-

·         Agency theory concept, conflicts and resolutions-

·         Measuring managerial performance, compensation and incentives

Source of funds-

·         Factors to consider when selecting source of funds-

·         Long term and short term sources of funds –

·         External and internal sources of funds.-

·         Sources of funds for small business enterprises.

 Financial markets-

·         Nature and role of financial markets-

·         Classifications of financial markets :primary markets and secondary markets; Money market and capital market-

·         The stock exchange listing and cross listing-

·         Market efficiency: Efficient market hypothesis-

·         Stock market indices-

·         The financial institutions and intermediaries-

·         The role of capital market authority-

·         The central depository system (CDS)

Time value of money –

·         Concept of time value of money-

·         Compounding techniques-

·         Discounting techniques-

·         Loan a amortization schedule

·         Analyze the sources of finance for an organization Evaluate various investment decision scenarios available to an organization Appraise the performance of a business using financial tools Evaluate the current developments in business financing strategies Formulate the capital structure for a firm Determine the future value of a firm

 Valuation concepts in finance-

·         Concept of value: Market value, book value, replacement value, intrinsic value-

·         Valuation of fixed income securities-

·         Valuation of shares-Valuation of companies-

·         Valuation of unit trusts-

·         Valuation of mutual funds

Cost of capital-

·         The concept and significance of cost of capital-

·         Factors influencing cost of capital-

·         Components costs of capital-

·         Weighted average cost of capital (WACC)-

·         Marginal cost of capital(MCC)-

·         Capital structure and financial risk-

·         Factors influencing capital structure decisions

Capital investment decisions under certainty-

·         Nature of capital investment decisions-

·         Categories of capital projects-

·         Capital budgeting techniques under certainty : Non discounted cash flow techniques(Accounting rate of return(ARR) ,payback period,);discounted cash flow techniques(net present value (NPV), internal rate of return (IRR), discounted payback period, and profitability index (PI) ; NPV profile; comparison of the NPV and IRR methods when evaluating independent and mutually exclusive projects; problems associated with each of the evaluation methods-

·         Expected relations among an investment’s NPV, company value, and share price-Determination of cash flows for investment decision-Incremental approach for cash flows estimation-

·         Capital rationing :evaluation of capital projects and determination of the optimal capital project in situations of capital rationing for a single period rationing

Measuring business performance-

·         Users of financial statements and their informational needs. –

·         Nature of financial ratio analysis-

·         Types of financial ratios-

·         Limitations of ratios analysis

·         -Common size statements-

·         Financial planning and forecasting

Working capital management-

·         Introduction to working capital management

·         -Importance of working capital management-

·         Factors affecting working capital needs-

·         The working capital cycle.

·         -Working capital policies

Dividend policy

·         -Forms of dividends-

·         Dividend policies and factors influencing dividend policies-

·         Dividend theories

Islamic finance-

·         Justification for Islamic Finance; history of Islamic finance; capitalism; halal; haram; riba;gharar; usury -Principles underlying Islamic finance : principle of not paying or charging interest, principle of not investing in forbidden items e.g. alcohol, pork, gambling or pornography; ethical investing; moral purchases

·         -The concept of interest (riba) and how returns are made by Islamic financial securities-

·         Sources of finance in Islamic financing: muhabaha, sukuk, musharaka, mudaraba-

·         Types of Islamic financial products: -

·         sharia-compliant products: Islamic investment funds; takafulthe Islamic version of insurance Islamic mortgage ,murabahah, ; Leasing-ijara; safekeeping-

·         Wadiah; sukuk-islamic bonds and securitisation; sovereign sukuk; Islamic investment funds;Joint venture –

·         Musharaka, Islamic banking, Islamic contracts, Islamic treasury products and hedging products, Islamic equity funds; Islamic derivatives-International standardization/regulations of Islamic Finance: Case for standardization using religious and prudential guidance ,National regulators, Islamic Financial Services Board

Emerging issues and trends