Aims & Learning Objectives:
At the outset of the unit, students will be introduced to the nature of the company and its financial context in terms of financial institutions and the Stock Exchange. By taking this unit students will be able to advise on the different forms of finance that a company may use, how to compare their costs and form an appropriate financial structure, dividend policy, corporate restructuring and analysis of financial performance. The unit will include practical case study work and focus on academic research where it has been shown to have a direct implication for company practice, rather than advanced theory and quantitative analysis in finance research for its own sake. The unit will also ensure that students can understand various dimensions of the financial press - especially reports on companies, share price performance, etc. and see how this related to corporate behaviour.
Content:
The legal nature of a company, the financial institutional context, (nature and types of financial markets and financial institutions, understanding the financial press), general principles of valuation for businesses and securities and an outline of portfolio analysis, sources of finance and their costs, the corporate cost of capital, rates of return which should be earned by corporate divisions and projects to satisfy providers of finance, capital structure and dividend policy decisions, the capital budgeting process in practice, including modelling for risk analysis, and linking investment to corporate strategy through SVA and value chain analysis (especially for investments where benefits are difficult to quantify), evaluation of company performance, financial aspects of corporate restructuring, modelling financial outcomes.
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