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Financial management AC3059

This course introduces students to the concepts and theories of corporate finance that underlie the techniques which are offered as aids for the understanding, evaluation and resolution of financial managers’ problems.

This course aims to cover the basic building blocks of financial management that are of primary concern to corporate managers, and all the considerations needed to make financial decisions both inside and outside firms.

Prerequisites / Exclusions

If taken as part of a BSc degree, courses which must be passed before this course may be attempted:

  • AC1025 Principles of accounting.

This course may not be taken with:

  • FN2190 Asset pricing and financial markets
  • FN3092 Corporate finance.

Topics Covered

  • Financial management function and environment
  • Investment appraisals 1
  • Investment appraisals 2
  • Investment appraisals 3
  • Risk and return
  • Portfolio Theory and Capital Assets Pricing Model
  • Practical consideration of the Capital Assets Pricing Model and Alternative Asset Pricing Model
  • Capital market efficiency
  • Sources of finance – Equity
  • Sources of finance – Debt
  • Capital structure 1
  • Capital structure 2
  • Dividend policy
  • Cost of capital and capital investments
  • Valuation of business
  • Mergers
  • Financial planning
  • Working capital management
  • Risk management – concepts and instruments for risk hedging
  • Risk management – applications

Learning outcomes

If you complete the course successfully, you should be able to:

  • describe how different financial markets function
  • estimate the value of different financial instruments (including stocks and bonds)
  • make capital budgeting decisions under both certainty and uncertainty
  • apply the capital assets pricing model in practical scenarios
  • discuss the capital structure theory and dividend policy of a firm
  • estimate the value of derivatives and advise management how to use derivatives in risk management and capital budgeting
  • describe and assess how companies manage working capital and short-term financing
  • discuss the main motives and implications of mergers and acquisitions
  • integrate subject matter studied on related modules and to demonstrate the multidisciplinary aspect of practical financial management problems
  • use academic theory and research to question established financial theories
  • be more proficient in researching materials on the internet and Online Library
  • be able to use excel for statistical analysis.

Assessment

Unseen written exam (3 hrs).

Essential Reading

  • Brealey, R.A., S.C. Myers and F. Allen Principles of Corporate Finance. McGraw-Hill.

Course information sheets

Download the course information sheets from the LSE website.