Business Finance

This Finance module is designed to help learners understand the nature and scope of financial management and to develop financial skills and knowledge expected of a business manager, in relation to operational, pricing, investment and financial decisions. Learners will have the opportunity to apply contemporary thinking on strategic financial management including key success factors in the management of the finance function.

Introduction to Business Finance

• Common financial terminology and it’s context of use in corporate finance
• Role of finance function
• Forms of business organisations
• The financial and non-financial objectives of different organisations (e.g. value for money, maximising shareholder wealth, providing a surplus)
• Sustainability in Business Finance.

Financial Statement Analysis and Interpretation

• The relevance of the profit and loss account and balance sheet and how their layout aids the conveyance of information to the user
• Keys steps in financial ratio analysis
• Key financial ratios and classification
• Calculation of key ratios for assessing financial performance and business position
• Limitations of ratio analysis
• Overtrading

Working Capital Management

• Nature, elements, and importance of working capital and liquidity management
• Objectives of working capital management
• Working capital characteristics of different businesses and the importance of industry comparisons
• Profitability versus liquidity
• Determining working capital needs and funding strategies.
• Management of inventories, accounts receivable, accounts payable and cash
• Working capital problems for small business

Financing a Business

• Nature and role of financial markets and institutions
• The stock exchange and methods of share issue
• Sources of long, medium, and short-term equity and debt financing
• Internal sources of finance
• Venture capital and other sources of finance for small and medium sized businesses

Costing and Pricing

• Cost classification, direct and indirect, product and period
• Cost behaviour, fixed, variable, semi-fixed, semi-variable
• Product costing using activity-based costing (ABC)
• Pricing products and services using cost-based, demand-based, target-based and other pricing strategies.
• Customer profitability analysis (CPA)

Cost-Volume-Profit Analysis and Decision Making

• Break-even analysis
• Cost structure analysis
• Limitations to break-even analysis
• Contribution analysis for discontinuation of an activity and one-off contracts
• Qualitative factors in decision-making

Investment Appraisal and Decision Making

• Cash versus profit
• Traditional methods of investment appraisal
• Discounted cash flow methods
• Comparison of NPV & IRR
• Strengths and limitations of appraisal methods
• Identification of a project’s relevant costs and benefits
• Importance of qualitative factors