Raya University

College of Business and Economics

Department of Accounting and Finance
Module M10. Corporate Finance
Objective of the Upon the successful completion of this module, students should be able
module to:
 Explain the nature of financial management
 Analyze the performance of an organization using its financial
statements
 Manage the finance of business organizations
 Determine the values of financial assets
 Apply different techniques in evaluating the profitability of capital
projects
 Discuss the relationship between risk and return;
 Explain the current theoretical issues regarding capital structure
and the value of the firm;
 Discuss the pros and cons of various sources of long term financing;
Total ETCTS and ETCTS:
Credit Hours of the Credit .Hours:
module
Courses of the Module
Course Number Course Name Cr. Hr CP/ETCTS
AcFn 2101 Financial Management I 3 5

Course Information
Course Number AcFn 2101
Course Title Financial Management I
Degree Program BA Degree in Accounting and Finance
Module
Module
Coordinator
Lecturer Fantay Alemayehu
ETCTS Credits 5
Contact Hours (per 3
week)
Course Objectives The aim of the course is to expose students to the basic concepts and
& Competences to techniques of Financial Management. This course enhances students
be Acquired understanding of corporate finance and to improve their ability to make decisions
in the firm that create shareholder value. The course emphasizes on financial
decision making within the firm.

Course Description This course deals with fundamental financial concepts and principles.
Emphasis is placed on practical problem solving skills based on these
concepts and principles. Topics include the role of the financial manager;
financial analysis; risk and return, the cost of capital; capital budgeting; and
leverages
WEEKS Course Contents Reading
1,2 1. Introduction
 1.1 An overview of financial management
1.2 Scope of financial management
1.3 Goal of financial management
1.4 Function of financial management
1.5 Agency problem
1.6 Close related fields of financial
Management
1.7 Financial markets and corporations
3,4,5,6 2. Financial Analyses and Planning
2.1. Financial Statement Analysis
2.1.1. Vertical and horizontal Analysis
2.1.2. Ratio Analysis
2.1.2.1. Liquidity ratios
2.1.2.2. Asset Management ratios
2.1.2.3. Profitability ratios
2.1.2.4. Debt management ratios
2.1.2.5. Market value ratios
2.2. Financial Forecasting
7,8,9 3. The Cost of Capital
3.1. The concept of cost of capital and
opportunity cost
3.2. Determining Component of Cost of Capital
3.2.1. Cost of Debt
3.2.2. Cost of Preference Capital
3.2.3. Cost of Equity
3.3. The weighted Average
3.4. The Marginal Cost of capital (MCC)
10,11,12 4. Capital Budgeting/Investment Decision
4.1. Definition, Importance of capital budgeting
4.2. Project classifications
4.3. Capital budgeting processes
4.4. Capital Budgeting Evaluation Techniques
4.5. Capital budgeting under uncertainty
13,14,15 5. Financing Decision
5.1. The concept of capital structure
5.2. Leverage
5.2.1. Overview of breakeven point
5.2.2. Operating leverage
5.2.3. Financial leverage
5.2.4. Total leverage
5.3. Method of financing
5.3.1. Debt financing
5.3.2. Equity financing
5.3.3. Lease financing
Teaching & Learning The teaching and learning methodology include lecturing, discussions,
Methods/strategy problem solving, and analysis. Take-home assignment will be given at the
end of each chapter for submission within a week. Solution to the
assignments will be given once assignments are collected. Cases with local
 relevance will also be given for each chapter for group of students to
present in a class room. The full and active participation of students is
highly encouraged.
Assessment/Evalu The evaluation scheme will be as follows:
ation Test Test Assignment 1 Assignment 2 Final Total
1 2 (group) (individual)

15% 15% 10% 10% 50% 100%

Work load in hours

Roles of the He/she will come to the class regularly Tot

on time
ECTand deliver the lecture in
Hours Required
Instructor a well-organized manner. Besides, at the al end of each class he/she gives
S
Hrs
reading assignment for the next class. He/she will make sure that proper
Self-
assessments are given. He/she is also responsible to give feedback for
Lectur La Assessme Tutoria Studi Assignme Advisi
es b nts each
ls assessment.
es nt ng
Roles of the students The success of this course depends on the students’ individual and
48  - 10collective 55  - to the - class discussions.
12 contribution 135 5Students are expected to
participate voluntarily, or will be called upon, to contribute to set exercises
and problems. Students are also expected to read the assigned readings and
prepare the cases before each class so that they could contribute effectively
to class discussions. Students must attempt assignments by their own.
Proficiency in this course comes from individual knowledge and
understanding. Copying the works of others is considered as serious offence
and leads to disciplinary actions.
Text and reference Text Book:
books  Ross, Westerfield & Jordan. Fundamentals of corporate finance. 9th Ed.
Reference Books
 Brigham Ehrhadt. Financial management theory and practice. 13th Ed.
 Khanna & Jain. Financial management.
 Financial management. Pandey.