Financial management

Aims

To introduce students to the role of financial management Familiarize students with financial reporting Use financial ratios and other techniques to analyse firm’s performance Understand the use of cost-volume-profit analysis in decision-making Familiarize students with investment appraisal criteria (e.g. IRR, NPV) Explain the sources and cost of capital, and working capital management issues  

Prerequisites

Undergraduate degree (e.g. BSc, BA), Basic knowledge of finance & accounting
  

Learning Outcomes

The students will be able to read financial statements and use their knowledge to critically examine and analyze them   The students will be able to solve problems related to break-even point, cost-volume profit analysis, and target profit and make appropriate recommendations   The students will be able to consider investment appraisal criteria in order to evaluate alternative investment opportunities, using a variety of techniques and a combination with decision trees, sensitivity and scenario analysis, and make appropriate recommendations   The students will be able to Identify the different sources of finance available to an organization and calculate the cost of equity and the cost of debt   The students will be able explain what is meant by working capital and the operating cycle, and outline some of the working capital policies that may be adopted by companies and use the operating cycle to evaluate a company’s working capital requirement performance  

Syllabus

 This five-day intensive course will provide an overview of financial management / financial accounting, its theoretical foundations, and the processes used in empirical application. Students will be introduced to the main theoretical concepts and various applications. They will be given an assignment, requiring them to collect data and proceed to the financial analysis of real firms. Various exercises will be solved during the lectures.

Content Delivery

The primary modes of delivery are readings, lecture, discussion, exercises, and the assignment. Each lecture is prepared on power point / pdf slides and distributed to the student through intranet. As outlined in more detail below, each day focuses on a single topic which is obviously related to knowledge acquired over the past days. Where applicable, the course starts from an introductory level to refresh the memory of students, allowing them to understand the more in depth discussion that follows. Lectures are accompanied by exercises. In the final assignment, students are asked to prepare a report analysing the financial performance of a company in relation to its main competitors. Moreover, a short presentation regarding the assignment will be held the last day of the course.   

Coursework And Assignment Details

Assignment (50%):   Financial analysis (40%)   Individual Project Prepare a report commending on the financial performance of a company given by the lecturer. You should calculate appropriate financial ratios (liquidity, profitability, leverage, efficiency) and interpret them. You should also compare the performance of the company with that of another 2 firms operating in the same industry. Your analysis should cover at least a three years’ time period. At the end of the report outline potential limitations of your analysis and additional information that could enrich the usefulness of your report. Please attach the financial statements (balance sheets, profit-loss statements) you will use together with your report. Assignments should be sent to dniklis@hotmail.com till  April, 25th.   (i)                Indicative list of financial ratios: 1) Current Ratio  = Total Current Assets / Total Current Liabilities 2)  Quick Ratio  = (Cash + Trade Debtors) / Total Current Liabilities 3)  Gross Profit Margin = Gross Profit / Turnover  4)  Net Profit Margin =  Adjusted Pre-Tax Profit / Turnover 5)  Stock Days  =   (Stock / COGS) * 365 6)  Trade Debtor Days  =     (Trade Debtors / Turnover) * 365 7)   Trade Creditor Days =    (Trade Creditors / COGS) * 365 8)   Interest Coverage Ratio =   EBITDA / Interest Payments 9)   Debt-to-Equity Ratio =       Total Liabilities / Total Equity 10)  Return on Equity =     Net Income / Total Equity 11)  Return on Assets  =   Net Income / Total Assets 12)  Profit per Employee = Adjusted Pre-Tax Profit / Total Employees     (ii)              Indicative Market value ratios:   1) Earnings per share =  Net Income Available to Common Shareholders/   Number of Common Shares Outstanding   2)   Book value per share =  Shareholders Equity / Average Number of Common  Shares    Or other similar market value ratios         Short Presentation (10%) (Duration: 10 minutes per person, which will be held the last day (Friday, 26th) of the course)   A short presentation of the following regarding the assignment: a.      basic characteristics of the preferred company (name, sector, main competitors) b.      main financial elements for the last five years (sales, profit/loss, growth rates)   Final Exams (50%) Various topics, combination of theory and exercises