MIDLANDS STATE UNIVERSITY

FACULTY OF COMMERCE

DEPARTMENT OF ACCOUNTING

FINANCIAL MANAGEMENT FOR ACCOUNTANTS 2

Preamble

The aim of this module is to develop the knowledge and skills expected of a finance manager, in
relation to investment, financing and dividend policy decisions. It builds on the knowledge
gathered in financial management for accountants 1

Pre-Requisites

Students are supposed to have done ACC 216

Purpose & objective of the module

On completion of the module students should be able to:

a) Discuss and apply the portfolio theory and the capital asset pricing model

b) Calculate cost of various elements of capital and recommend capital structure

c) Discuss and apply working capital management techniques

d) Carry advanced investment appraisal of projects

e) Evaluate dividend policies of the firm

f) Explain and apply risk management techniques in international business activities

g) Discuss mergers and acquisitions

Module assessment

Course work will be by way of in class tests which will account for 30% of overall assessment
while the session examinations will account for 70% of the overall assessment.

Module content

Portfolio theory and CAPM

 Diversification and risk

 Portfolio size and risk

  CAPM and the efficient frontier

 The APM model

 Beta analysis

Cost of Capital

 Sources of finance and their relative costs

 Estimating the cost of equity

 Estimating the cost of debt and other capital instruments

 Estimating the overall cost of capital

 Capital structure theories and practical considerations

 Impact of cost of capital on investments

Working capital

 Nature ,elements and importance of working capital

 Management of inventories ,accounts receivables ,accounts payables and cash

 Funding strategies and working capital needs

Advance Investment appraisal

 Discounted cash flows technique

 Allowing for inflation and taxation in DCF

 Adjusting for risk and uncertainty in investment appraisal

 Specific investment decisions (lease or buy, asset replacement and capital rationing)

 Risk and Capital Budgeting

 Capital Rationing
Dividend policy and theory

 Dividend payment procedure

 Forms of dividends

 Dividend policy theories

 Factors affecting dividend decisions

International Risk Management

 The nature and types of risk and approaches to risk management

 Causes of exchange rate differences and interest rate fluctuations

 Hedging techniques for foreign currency risk

 Hedging techniques for interest rate risk.

Mergers and Acquisitions

 Reasons for mergers

 Defense against takeover

 Valuations in mergers and acquistions

Recommended Texts

1) Financial Management, Correa et al (Latest edition)

2) Managerial Finance; F Vigario; Lexis Nexis Publishers, (Latest edition)

3) Principles of Managerial Finance; L Gitman (Latest Edition)

4) Corporate Finance; Brealy and Meyers (Latest Edition)

5) ACCA F9 Financial Management Module.(latest)