Corporate Financial Management

Aim
The aim of this module is to address the need for the Chartered Secretary to understand the issues involved in corporate financial policy, planning, decision-making and control.

Learning outcomes
At the conclusion of this module, the candidate will be able to:

• Understand the financial sources and requirements of the employing or client organisation.
• Demonstrate competence in the skills of Corporate Financial planning.
• Understand the role and efficiency of the capital markets.
• Understand the nature and importance of capital structure and the cost of capital.
• Understand and apply the principles of working capital management.
• Understand the impact of global and multi-national operations on corporate financial management.

Learning content

Financial Objectives and Requirements

The financial objectives of the main types of organisation: public and private limited companies, statutory companies, trusts, and companies limited by guarantee.
Determination of financial requirements and their impact on business planning and decision taking. The role of financial audit.

Sources of Finance

Major stock markets including the London International Stock Exchange. The Alternative
Investment Market and over-the-counter markets. The institutions that work in and use these markets. Money markets. Option markets. Other sources of finance including state funding, corporate donations, sponsorship, grants and subscriptions.

Share and Loan Capital

Types of share capital. Authorised and issued capital. Methods of issuing shares.
Pricing new share issues. Dividend policy, including scrip dividends. Share re-purchases.
Loan capital. The nature of debt. Debenture stock, convertible stock, warrants. Leasing and hire purchase. Bank loans and overdrafts. International capital markets. Retained funds as a source of finance.

Capital Structure and the Cost of Capital

Costs of individual types of finance. Risk and return in relation to the cost of capital.
Weighted average cost of capital. Portfolio theory and the Capital Asset Pricing Model.
Market efficiency. Capital gearing. Capital structure theory and decisions.

Working Capital Management

Working capital and its importance. Planning and control of cash and marketable securities, debtors, current liabilities and stock.

Capital Investment Appraisal

Accounting Rate of Return. Payback Period. Net Present Value, Internal Rate of Return and their comparison.  Implications of taxation and inflation. Capital rationing. Capital budgeting under uncertainty. Lease or buy decisions.

Business Reorganisation

Business expansion and financial growth. Strategies for expansion and contraction.
Mergers and acquisitions. Tactics in takeovers. Regulation of takeovers. Divestment methods. Prediction of business failure. Liquidation. Capital reconstruction schemes.

International Aspects

Multinational operations. Forms of overseas operation and investment. Foreign investment decisions. Financing overseas investment. Political risk and foreign exchange risk. Management of exchange rate risk.