FINAN200-19A (TGA)

Financial Management 1

15 Points

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Division of Management
School of Accounting, Finance and Economics

Staff

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Convenor(s)

Lecturer(s)

Abhishek Mukherjee

Abhishek Mukherjee
To be advised
abhishek.mukherjee@waikato.ac.nz

Administrator(s)

: denise.martin@waikato.ac.nz
: uwt@waikato.ac.nz

Placement Coordinator(s)

Tutor(s)

: brenden.merrill@waikato.ac.nz

Student Representative(s)

Lab Technician(s)

Librarian(s)

: clive.wilkinson@waikato.ac.nz

You can contact staff by:

  • Calling +64 7 838 4466 select option 1, then enter the extension.
  • Extensions starting with 4, 5, 9 or 3 can also be direct dialled:
    • For extensions starting with 4: dial +64 7 838 extension.
    • For extensions starting with 5: dial +64 7 858 extension.
    • For extensions starting with 9: dial +64 7 837 extension.
    • For extensions starting with 3: dial +64 7 2620 + the last 3 digits of the extension e.g. 3123 = +64 7 262 0123.
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Paper Description

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This paper covers capital budgeting, capital structure and working capital management. Three key important questions are answered in this course: What long-term investments should the firm take on? Where will we get the long-term financing to pay for the investment? How will we manage the everyday financial activities of the firm?

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Paper Structure

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Lectures

Provide quick access to the whys and how of dealing with the three most important questions in finance: Capital Budgeting, Capital Structure and Working Capital Management. Provide easy-to-understand information, including equations and examples that can be quickly applied to most problems of corporate finance.

Workshop

All students should attend the workshop each week. Workshops commence in the second week of semester.

Mobile Phones and Cross Chats

As a courtesy to others, students are strongly urged not to disrupt lecture sessions by using the mobile phones and cross chatting during these sessions. Students are advised to disable their mobile phones during lectures.
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Learning Outcomes

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Students who successfully complete the course should be able to:

  • Identify the difference between accounting income and cash flow. Realise how to determine a firm’s cash flows. Be aware of where to find the information to calculate cash flow. (LO1)

    Identify the difference between accounting income and cash flow. Realize how to determine a firm’s cash flows. Be aware of where to find the information to calculate cash flow.

    Linked to the following assessments:
  • Understand how to calculate risk and return and the relation between them. Develop the security market line with an intuitive approach that bypasses much of the usual portfolio theory. Realize the CAPM model and discuss beta estimation. (LO2)

    Understand how to calculate risk and return and the relation between them. Develop the security market line with an intuitive approach that bypasses much of the usual portfolio theory. Realize the CAPM model and discuss beta estimation.

    Linked to the following assessments:
  • Understand how to determine a firm's cost of equity capital, cost of debt & overall cost of capital. Explain the effects of financial leverage on cash flows & the cost of equity. (LO3)
    Linked to the following assessments:
  • Understand how to compute the operating cycle and the cash cycle. Identify the differences between a flexible short-term financing policy and a restrictive one. Explain the pros and cons of each. (LO4)

    Understand how to compute the operating cycle and the cash cycle. Identify the differences between a flexible short-term financing policy and a restrictive one. Explain the pros and cons of each.

    Linked to the following assessments:
  • Explain and understand how exchange rates are quoted and what they mean. Identify the difference between spot and forward rates. Realize and explain purchasing power parity and interest rate parity. Be aware of international capital budgeting. (LO5)

    Explain and understand how exchange rates are quoted and what they mean. Identify the difference between spot and forward rates. Realize and explain purchasing power parity and interest rate parity. Be aware of international capital budgeting. (LO5)

    Linked to the following assessments:
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Assessment

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Assessment is by the components as listed below and a final exam.
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Assessment Components

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The internal assessment/exam ratio (as stated in the University Calendar) is 50:50. There is no final exam. The final exam makes up 50% of the overall mark.

The internal assessment/exam ratio (as stated in the University Calendar) is 50:50 or 0:0, whichever is more favourable for the student. The final exam makes up either 50% or 0% of the overall mark.

Component DescriptionDue Date TimePercentage of overall markSubmission MethodCompulsory
1. Pre-test assessment
1 Mar 2019
1:00 PM
1
  • In Class: In Lecture
2. Assignment I
21 Mar 2019
5:00 PM
14
  • Online: Submit through Moodle
3. Mid-term Test
9 Apr 2019
12:00 PM
20
  • In Class: In Lecture
4. Assignment II
18 May 2019
5:00 PM
15
  • Online: Submit through Moodle
5. Exam
50
✔
Assessment Total:     100    
Failing to complete a compulsory assessment component of a paper will result in an IC grade
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Required and Recommended Readings

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Required Readings

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Fundamentals of Corporate Finance by Ross, Westerfield, and Jordan (10/11th ED).

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Recommended Readings

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Corporate Finance by Ross, Westerfield, and Jordan.

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Online Support

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Lecture slides, tutorial resources and related teaching materials will be available in Moodle.

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Workload

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The course has 48 (4 X 12) contact hours (lectures and tutorials). The rest of the 150 hours expected workload in this 15-point paper can be distributed as follows: 20 hours to complete the Assignment, 24 hours to prepare for and attend the Midterm Test and 58 hours to prepare for and attend the Final Exam.

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Linkages to Other Papers

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There is a significant interrelationship between finance and non-finance areas. First, finance and accounting are related since accounting information is needed for finance decision. Second, finance and economics are related because economic activity and policy affect finance decisions, and vice versa. Finance and management are related because the management decisions, such as setting salary, hiring new staff and paying bonus must be coordinated with finance. Finance and information system are related because finance decisions rely on information. Last but not least, there are four ps of marketing, product, price, place and promotion. Clearly, the price and promotion, e.g., advisement are related to finance.
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Prerequisite(s)

Prerequisite papers: FINA201 or FINAN101

Corequisite(s)

Equivalent(s)

Restriction(s)

Restricted papers: FINA311, FINA510

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