Aim
To ensure that
students can exercise judgement and technique
to make commercial value added decisions in
strategic financial management and are able
to adapt to changes in factors affecting those
decisions.
Objectives
On completion
of this paper candidates should be able to:
-
prepare reports for management explaining
and evaluating the financial consequences
of strategic decisions
-
identify and evaluate appropriate sources
of finance, their risks and costs and assess
potential investment decisions and strategies
-
understand the impact of the global business
environment on national and multi-national
organisations
-
explain, demonstrate and recommend suitable
risk management techniques for multinationals
-
understand the significance of cash management
and the treasury function in the commercial
environment and
-
demonstrate the skills expected in Part 3.
Content
Objectives and
corporate governance aims and objectives
of an organisation and their impact on business
planning, key stakeholders, environmental issues,
goal congruence, key aspects of governance,
implications of corporate governance.
Strategy formulation
strategic planning process and link with
investment decisions, strategic planning for
multinationals.
Risk analysis
cost of capital, cost of equity (CAPM and
DVM), cost of debt, WACC, impact of varying
capital structures, interest rate and foreign
exchange risk, hedging.
Investment decisions
decision making techniques, in particular
detailed knowledge of discounted cashflow (NPV),
adjusted NPV, expansion strategies - acquisition,
merger and takeover, valuations, defence strategies.
Treasury management
and financial forecasting methods of financing
short and long term investment, role of cashflow
forecasting in business planning, role of the
treasury function, dividend policy.
The global economic
environment international factors affecting
business developments, global competition, role
of multi-national companies, free trade, protectionism,
trade agreements, common markets, exchange rate
determination, introduction of a single currency,
role of World Bank and International Monetary
Fund (IMF), economic relations between developed
and developing countries.
Global financial
management appraisal of overseas investment
decisions including the impact of overseas taxation,
overseas cost of capital, forecasting future
exchange rates, political risk, raising capital
overseas, managing financial resources within
a multinational group.
Ethical considerations
ethics and business conduct.
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