INSTITUTE of BUSINESS MANAGEMENT
College of Business Management
Department of Accounting & Finance
Financial Management - FIN 522
General Information
Title: Financial Management Practices Faculty:
Code: FIN522 Email:
Pre-requisite: FIN516, Finance for Office:
Managers Phone:
Level: Masters Consultation time:
Credit Hours: 3
Course Specifications
Program(s) MBA
Department Accounting & Finance
Faculty/College CBM
Approval date of upgraded specification
Course Description
This course builds on the fundamental concepts learnt in the Finance for Managers course.
The main concepts covered in this course include Financial Planning & Forecasting, Risk &
Return, Capital Budgeting, Free Cash Flow valuation and Capital Structure Decisions.
Course Objectives
The course intends to build conceptual understanding of the students about the specific
techniques and decision rules that are used in financial management to help maximize the
value of the firm. The course addresses one of the most important areas in finance which is
risk with the aim of equipping students to develop a good appreciation of various types of
risks in the business world. Another objective of the course is to provide the student with the
tools to know about and be able to address the basic financial problems confronting business
today.
Program Learning Outcomes (PLOs)
Knowledge Outcomes:
Skill Outcome:
Course Learning Outcomes (CLOs) Aligned Program
Learning Outcomes
CLO 1: Students are able to understand the concept of PLO 1
value maximization, apply different techniques of
Capital Budgeting and make investment
recommendations accordingly
CLO 2: Students will be able to define and measure PLO 2
various risks
CLO 3: Students are able to comprehend the approaches PLO 2
firms take in determining its capital structure and
calculate its cost of capital
Page 1 of 6
CLO 4: Students can make forecasts and prepare a basic PLO 4
financial plan for a firm
CLO 5: Students will be able to do valuation of a company PLO 5
using free cash flows
Course Teaching and Learning Activities
Assessment Techniques Weight Aligned Course Learning Outcomes
Quizzes 10% CLO1, CLO2, CLO3, CLO4
Assignments 5% CLO1, CLO2, CLO3, CLO4
Mid Term 30% CLO1, CLO2
Class Discussions / Participations 5% CLO1, CLO2, CLO3, CLO4
Term Report / Presentation 10% CLO1, CLO2, CLO3, CLO4
Final exams 40 % CLO1, CLO2
Page 2 of 6
Course Contents
Weeks Topics CLO & Teaching Plan
Overview of Financial Management
- Significance of finance in the firms
- Value maximization - the logical CLO 1
financial goal of the corporation & Pre-Reading: Chapter 1 from Financial
business ethics Management: Theory & Practice by Eugene F.
Week 1 - Stakeholders and their divergent Brigham and Michael C. Ehrhardt (latest edition).
objectives Class Activity: Lecture/Discussion.
- The problem of Agency Post-Reading: Read a news article on ethical
- Role of Finance in Not-for-Profit financial practices and reflect.
sector
- SMEs
Capital Budgeting Decisions
- The Capital Budgeting Process
CLO 1
- Basic Principles of Capital Budgeting
Pre-Reading: Chapters 8-10 from Principles of
- Capital Budgeting Techniques
Corporate Finance by Richard A. Brealey,
- Average Accounting Rate of Return
Stewart C. Myers, and Franklin Allen.
Week - Profitability Index
Class Activity: Group discussion on NPV vs IRR
2-4 - Ranking Conflicts between NPV and
with case studies, and problem-solving on ranking
IRR
conflicts.
- The Multiple IRR Problem and the NO
Post-Reading: Research a company’s capital
IRR Problem
budgeting decision and analyze its outcomes.
- Popularity and Usage of the Capital
Budgeting Methods
Risk and Return
- Business Risk and Financial Risk CLO 2
- Business Risk and Its Components Pre-Reading: Chapters 5-6 from Essentials of
- Sales Risk Investments by Zvi Bodie, Alex Kane, and Alan J.
- Operating Risk Marcus.
Week
- Financial Risk Class Activity: Work in teams to calculate risk-
5-6
- The Risks of Creditors and Owners return profiles for a hypothetical portfolio.
- Portfolio Post-Reading: Prepare a report on the relationship
- Volatility, Standard Deviation between risk and return using historical stock
- Foreign Currency Risk market data.
- Interest Rate Risk
Week Financing Decision CLO 3
7-8 - Overview of financing choices Pre-Reading: Chapters 13-14 from Corporate
- Distinction between debt & equity Finance by Jonathan Berk and Peter DeMarzo.
- Equity financing options: owner’s Class Activity: Role-playing to design financing
equity, venture capital, common shares, strategies for different case studies.
warrants & rights, private placements, Post-Reading: Analyze and summarize the
IPO, retained earnings, working capital financing options used by a real-life multinational
- Debt financing options: short-term and corporation.
long-term financing
- Hybrid securities: convertible debt,
Page 3 of 6
Weeks Topics CLO & Teaching Plan
preferred stock
- Cost of Equity (CAPM)
- Beta computation
- Cost of preferred shares
- Cost of debt instruments
- Weighted Average Cost of Capital with
and without taxes
- Costs of Asymmetric Information
Week 9 Mid Term Exam
Financial Forecasting & Planning
CLO 4
- Forecasting sales and other items in the
Pre-Reading: Chapter 16 from Fundamentals of
financial statements
Financial Management by James C. Van Horne
- Pro-forma income statement and
Week and John M. Wachowicz Jr.
balance sheet
10-11 Class Activity: Develop a financial forecast for a
- Cash flow forecasting
sample business and analyze its viability.
- Cash management (Baumol model &
Post-Reading: Reflect on financial forecasting
Miller-Orr model)
techniques used in corporate settings.
- Strategic, operating and financial plans
Free Cash Flow (FCF) Valuation
- Computing FCFF and FCFE from Net
CLO 5
Income
Pre-Reading: Chapters 6 and 7 from Valuation:
- Computing FCFF and FCFE from the
Measuring and Managing the Value of
Statement of Cash Flows
Companies by McKinsey & Company Inc., Tim
- Finding FCFF and FCFE from EBIT or
Week Koller, Marc Goedhart, and David Wessels.
EBITDA
12-13 Class Activity: Forecast and calculate the FCF of
- FCFF and FCFE on a Usage-of-free-
a provided case company.
Cash-Flow Basis
Post-Reading: Write a case study analysis on a
- Forecasting FCFF and FCFE
company's valuation using free cash flow
- Other Issues in Free Cash Flow
methods.
Analysis
- Estimating share value using FCF
CLO 3
Pre-Reading: Chapters on lease accounting from
Leasing (based on IFRS 16)
Intermediate Accounting by Donald E. Kieso,
- What is a lease
Jerry J. Weygandt, and Terry D. Warfield.
Week - Why lease: sensible & dubious reasons
Class Activity: Debate: "Lease or Buy – Which is
14
better?" using industry-specific examples.
- Finance lease & Short Lease
Post-Reading: Compare leasing strategies for
- Lease or buy decision
startups vs established firms and present key
findings.
Project Presentations
Students will work on a given topic of
Week
finance and a preselected company in
15-16
small groups (4-5 students). They will
write a project report and also present it.
Page 4 of 6
Weeks Topics CLO & Teaching Plan
Week
Final Exam
17
Pedagogies
The course is highly interactive between the class and the instructor. Through case
studies/presentations, problems, and specific experiential classroom activities, students will have the
opportunity to use the concepts, ideas, and strategies presented in class. Problem-solving sessions
occur in both individual (primarily) and team (occasionally) settings.
This introductory undergraduate course will incorporate a lecture and project-based approach. The
textbook in this course will be used as a reference point for the discussion(s). Students are
encouraged to read and teach the major principles found in the textbook.
Lectures, professional academic illustrative videos, class discussions, home exercises and quizzes,
case studies, presentations and a term project. Case studies will be selected to develop specific,
actionable skills and are not intended to be vehicles for endless discussions and opinions. The
lectures are designed to reinforce and expand upon, not to substitute for, what students learn from the
assigned readings and study.
Rubric for marking
Attribute Grade Grade Grade Grade Grade
A- to A+ B- to B+ C- to C+ D F
Demonstrates Demonstrates Demonstrates Demonstrates Lack of
Conceptual a clear and clear limited/surface a superficial understanding
Understanding deep understanding understanding understanding and effort to
understandin of the ideas of the theory. of the theory. understand
60% g of the presented in the
theory. the theory. theoretical
concepts
Structure Particularly Consistent Paragraph Weak Lack of focus
20% clear focus and flow and paragraph
ideas with good transitions are structure and
logical transitions adequate illogical
transitions transitions
throughout
Language Language Free of errors Minor errors Fundamental Serious errors
20% especially in mechanics. in mechanics. mechanics in
clear and Clear Sentences errors. Lack mechanics.
concise with and concise could be of clarity and Lack on
flawless language more effective concision clarity and
mechanics. concision.
Page 5 of 6
Books / Reference Materials:
Financial Management. Theory & Practice Authors: Eugene F. Brigham and Micheal C. Ehrhardt,
latest available Edition
Supplementary Reading
Fundamentals of Financial Management by Eugene F. Brigham and Joel E. Houston latest
available edition
Head of Department
Date: November, 2024
Page 6 of 6
