Learning Objectives
8 objectives- Understand the fundamental concepts and importance of corporate finance in business decision-making.
- Analyze and interpret key financial statements to assess a company's financial health.
- Apply time value of money principles to evaluate investment and financing decisions.
- Evaluate investment opportunities using capital budgeting techniques.
- Explain cost of capital, capital structure theories, and their impact on company valuation.
- Assess dividend policies and working capital management strategies.
- Understand risk management techniques and the role of derivatives in hedging financial risks.
- Examine the principles of corporate governance and ethical considerations in finance.
Content Outline
PreviewUnit 1139: Corporate Finance Fundamentals
1. Introduction to Corporate Finance
- Definition and scope of corporate finance
- Importance in managerial decision-making
- Roles and responsibilities of financial managers
- Primary goal: Maximizing shareholder wealth
2. Financial Statements Analysis
- Overview of key financial statements
- Balance Sheet: Assets, liabilities, and equity
- Income Statement: Revenues, expenses, and profit
- Cash Flow Statement: Operating, investing, and financing activities
- Techniques for financial analysis
- Ratio analysis: Liquidity, profitability, solvency, and efficiency ratios
- Trend and comparative analysis
- Evaluating financial performance and health
3. Time Value of Money (TVM)
- Concept and rationale behind TVM
- Present Value (PV) and Future Value (FV) calculations
- Annuities and perpetuities
- Application of TVM in corporate finance decisions
- Loan amortization
- Valuation of bonds and stocks
4. Capital Budgeting
- Definition and importance of capital budgeting
- Evaluation techniques
- Net Present Value (NPV)
- Internal Rate of Return (IRR)
- Payback Period
- Profitability Index
- Project cash flow estimation
- Capital budgeting decision rules and considerations
5. Cost of Capital
- Definition and components
- Cost of debt and cost of equity
- Calculating Weighted Average Cost of Capital (WACC)
- Use of WACC in investment appraisal and capital structure decisions
6. Capital Structure
- Definition and significance
- Debt vs. equity financing
- Trade-off theory and its implications
- Impact of financial leverage on risk and return
- Optimal capital structure concepts
7. Dividend Policy
- Types of dividend policies (stable, residual, hybrid)
- Factors influencing dividend decisions
- Dividend theories (Dividend irrelevance, bird-in-hand, signaling)
- Effects of dividend policy on shareholder wealth and company valuation
8. Working Capital Management
- Definition and importance
- Components of working capital
- Cash management
- Inventory management
- Accounts receivable and payable management
- Techniques for managing liquidity and operational efficiency
9. Risk Management and Derivatives
- Types of financial risks faced by corporations
- Risk identification and measurement
- Introduction to derivatives
- Options: Calls and puts
- Futures and forwards
- Using derivatives for hedging and risk mitigation
10. Corporate Governance and Ethics
- Definition and principles of corporate governance
- Importance of transparency and accountability
- Ethical issues in corporate finance
- Role of governance in enhancing shareholder value
- Regulatory frameworks and best practices
Unlock the full outline
Get the complete content outline, learning outcomes and assessment methods for Corporate Finance.
KSh 20 one-off, or included with a plan
Learning Outcomes
Unlock the outline above to see learning outcomes.
Assessment Methods
Unlock the outline above to see assessment methods.