ACCA (UK) MSC (UK) MBA (UK) DMS (UK) DEM (UK) KAMAL MUSTAFA ACCA (UK) MSC (UK) MBA (UK) DMS (UK) DEM (UK)

FINANCIAL DECISION MAKING COURSE CONTENTS THE FOUNDATIONS THE FIRM AND ITS OPERATIONS WORKING CAPITAL MANAGEMENT INVESTMENT POLICY FINANCING DECISIONS DIVIDEND POLICIES AND DECISIONS

FINANCIAL DECISION MAKING COURSE CONTENTS THE FOUNDATIONS OVERVIEW OF FINANCIAL MANAGEMENT ECONOMIC ENVIRONMENT FOR BUSINESS FINANCIAL SECURITIES AN MARKETS A REVIEW OF FINANCIAL ACCOUNTING

FINANCIAL DECISION MAKING COURSE CONTENTS 2. THE FIRM AND ITS OPERATIONS FINANCIAL STATEMENTS FINANCIAL ANALYSIS PROFIT PLANNING LEVERAGE

FINANCIAL DECISION MAKING COURSE CONTENTS 3. WORKING CAPITAL MANAGEMENT INTRODUCTION OF WORKING CAPITAL CASH MANAGEMENT MANAGEMENT OF RECEIVABLES (DEBTORS) MANAGEMENT OF STOCK

FINANCIAL DECISION MAKING COURSE CONTENTS 4. INVESTMENT POLICY CAPITAL BUDGETING RISK AND REQUIRED RETURN VALUATION OF THE FIRM MERGERS AND ACQUISTIONS

FINANCIAL DECISION MAKING COURSE CONTENTS 5. FINANCING DECISIONS SOURCE OF SHORT AND INTERMEDIATE-TERM FINANCING LONG TERM FINANCING DECISIONS LEASE-BUY DECISIONS

FINANCIAL DECISION MAKING COURSE CONTENTS 6. DIVIDEND DECISIONS DIVIDEND POLICIES AND DECISIONS

OVERVIEW OF FINANCIAL MANAGEMENT DIAGRAM

OVERVIEW OF FINANCIAL MANAGEMENT EXAMPLE: AT THE END OF 2012 BRITISH AIRWAYS MADE AN ANNOUNCEMENT, AS PART OF A STOCK MARKET BRIEFING, THAT THEIR QUARTER 4 PROFITS HAD RISEN BY 30%. IMMEDIATELY AFTER THE ANNOUNCEMENT THE SHARE PRICE FELL REQUIRED: A) DISCUSS WHY SHAREHOLDERS MIGHT BE DISSATISFIED, DESPITE HIGHER PROFITS?

OVERVIEW OF FINANCIAL MANAGEMENT ANSWER PROFITS ARE HISTORIC, SHAREHOLDERS CARE ABOUT THE FUTURE – PERHAPS THEY CONCERNED WHERE BA WERE PLANNING TO INVEST? THEREFORE INVESTMENT DECISIONS ARE VERY IMPORTANT TO INVESTORS

OVERVIEW OF FINANCIAL MANAGEMENT ANSWER INVESTMENT DECISIONS REQUIRE NEW FINANCE, SHAREHOLDERS CARE ABOUT DEBT LEVELS PERHAPS THEY CONCERNED INVESTMENT INFORMATION THEREFORE FINANCING DECISIONS ARE VERY IMPORTANT TO INVESTORS

OVERVIEW OF FINANCIAL MANAGEMENT ANSWER PROFITS ARE NOT CASH FLOWS, SHAREHOLDERS OFTEN WANT TO SEE RETURNS THEY WILL BE GETTING AS DIVIDENDS. THEREFORE DIVIDEND DECISIONS ARE VERY IMPORTANT TO INVESTORS

OVERVIEW OF FINANCIAL MANAGEMENT ENCOURAGING SHAREHOLDER WEALTH MAXIMISATION PROBLEMS?

OVERVIEW OF FINANCIAL MANAGEMENT AGENCY THEORY THE DANGER THAT MANAGERS MAY NOT ACT IN THE BEST INTEREST OF SHAREHOLDERS IS REFERRED TO AS THE AGENCY PROBLEM

OVERVIEW OF FINANCIAL MANAGEMENT AGENCY THEORY Q: WHY DO MANAGERS AND OTHERS AGENTS OF THE SHAREHOLDERS, SUCH AS EMPLOYEES SOMETIMES HAVE DIFFERENT OBJECTIVES?

OVERVIEW OF FINANCIAL MANAGEMENT UNLESS THEY ARE ALSO OWNERS OF THE BUSINESS, MANAGER MAY PREFER TO : MAXIMISE SHORT-TERM PROFITS MINIMISE DIVIDENDS REDUCE RISK BY DIVERSIFYING BOOST THEIR OWN PAY & PERKS AVOID DEBT FINANCE

OVERVIEW OF FINANCIAL MANAGEMENT THE DANGER THAT MANAGERS MAY NOT ACT IN THE BEST INTEREST OF SHAREHOLDERS IS REFERRED TO AS THE AGENCY PROBLEM IT CAN BE DEALT BY MONITORING THE ACTIONS OF MANAGEMENT PERFORMANCE OR BY THE USE OF INCENTIVE SCHEMES

OVERVIEW OF FINANCIAL MANAGEMENT HOW TO DEAL WITH AGENCY PROBLEM?

OVERVIEW OF FINANCIAL MANAGEMENT CORPORATE GOVERNANCE WHAT IS CORPORATE GOVERNANCE?

OVERVIEW OF FINANCIAL MANAGEMENT IN THE UK CORPORATE GOVERNANCE REGULATIONS HAVE BEEN DESIGNED TO MONITOR THE ACTIONS OF MANAGEMENT

OVERVIEW OF FINANCIAL MANAGEMENT HERE SOME OF THE MAIN REQUIRMENTS: BOARD OF DIRECTORS KEY COMMITTEES

OVERVIEW OF FINANCIAL MANAGEMENT BOARD OF DIRECTORS SEPARATE MD & CHAIRMAN MINIMUM 50% NON-EXECUTIVE DIRECTORS CHAIRMAN INDEPENDENT MAX 1 YEAR NOTICE PERIOD NEDS SHOULD BE INDEPENDENT (3 YEARS CONTRACT, NO SHARE OPTION)

OVERVIEW OF FINANCIAL MANAGEMENT KEY COMMITTEES REMUNERATION COMMITTEE PAY & INCENTIVES OF EXECUTIVE DIRECTORS NEDs ONLY

OVERVIEW OF FINANCIAL MANAGEMENT KEY COMMITTEES 2. AUDIT COMMITTEE RISK MANAGEMENT NEDs ONLY

OVERVIEW OF FINANCIAL MANAGEMENT KEY COMMITTEES 3. NOMINATION COMMITTEE CHOICE OF NEW DIRECTORS NEDs ONLY

OVERVIEW OF FINANCIAL MANAGEMENT INCENTIVE SCHEMES – TWO MAIN TYPES 1. PERFORMANCE RELATED PAY : EITHER AGAINST PROFIT OR A STRATEGIC PERFORMANCE MEASURE 2. SHARE OPTIONS: OPTIONS TO BUY SHARES IN SAY 3 YEARS TIME AT TODAY’S SHARE PRICE

SUMMARY OF TODAY CLASS MAXIMISATION OF SH WEALTH ENCOURAGED BY CORPORATE GOVERNANCE COMMITTEES MAIN DECISIONS INVESTMENT, FINANCING & DIVIDEND