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

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

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

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

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

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

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

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

9. OVERVIEW OF FINANCIAL MANAGEMENT
DIAGRAM

10. 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?

11. 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

12. 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

13. 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

14. OVERVIEW OF FINANCIAL MANAGEMENT
ENCOURAGING SHAREHOLDER WEALTH MAXIMISATION
PROBLEMS?

15. 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

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

17. 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

18. 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

19. OVERVIEW OF FINANCIAL MANAGEMENT
HOW TO DEAL WITH AGENCY PROBLEM?

20. OVERVIEW OF FINANCIAL MANAGEMENT
CORPORATE GOVERNANCE WHAT IS CORPORATE GOVERNANCE?

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

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

23. 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)

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

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

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

27. 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

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