finance syllabus

• strategic role of financial management
• objectives of financial management

  • profitability, solvency, liquidity, growth, efficiency
• interdependence with other key business functions
• internal source of finance

  • retained profits
• external source of finance

  • debt: short term (commercial bill, overdraft, factoring), long term (leasing, unsecured notes, mortgage, debentures)
  • equity: ordinary shares (rights issues, new issues, placements, share purchase plans), private equity
• Financial institutions

  • financial companies, ASX, banks, unit trusts, life insurance companies, investment banks, superannuation funds
• influence of the government

  • ASIC, company tax
• global market influence

  • interest rates, economic outlook, availability of funds
• planning and implementing

  • financial needs, budgets, record systems, financial risks, financial controls
• monitoring and controlling

  • balance sheets, income statements, cash flow statements
• financial ratios

  • liquidity: current ratio
  • gearing: debt to equity ratio
  • profitability: gross profit ratio, net profit ratio, return on equity ratio
  • efficiency: expense ratio, accounts receivable turnover ratio
  • comparative ratio analysis - against standards, with similar businesses, over different time periods
• limitations of a financial report

  • notes to the financial statements, valuing assets, capitalised expenses, normalised earnings, debt repayments, timing issues
• ethical issues related to financial reports
• cash flow management

  • cash flow statements
  • distribution of payments, discount for early payment, factoring
• working capital management

  • control of current assets: cash, receivables, inventory
  • control of current liabilities: payables, overdraft, loans
  • strategies: leasing, sale and lease back
• profitability management

  • cost controls: fixed and variable costs, cost centres, expense minimisation
  • revenue controls: marketing objectives
• global financial management

  • exchange rates
  • interest rates
  • method of payment: payment in advance, clean payment, bill of exchange, letter of credit
  • hedging
  • derivatives