Course Outline

Welcoming Note

Welcome to BMMF 5103 : Managerial Finance.

Finance is an exciting yet interesting, challenging and ever-changing discipline. With the emergence of liberations and globalisation, new technology and innovations have brought a profound impact on the financial practices and markets. Managers are concerned with acquiring, financing and managing the business assets under these changes. Thus knowledge on managerial finance is essential for managers to perform their financial duties.

ProgramMasters In Business Administration

Module

Managerial Finance

Code BMMF 5103Status Core CourseLevel MasterCredit Hours 3 Credits (120 hours of learning in a semester)Pre-requist None

Evaluation60% Coursework

40% Final ExamLecturer Assoc. Prof. Loo Sin ChunSemester Taught

May 2004

Objectives The course is designed to provide an overview of the basic concepts and principles of financial management, with particular emphasis on risks, rates of return, and valuation.

Synopsis The course will focus on theories, concepts, and principles as opposed to institutional materials, although some institutional background is also presented.

Since this course is required of all MBA students, and not just finance majors, a great deal of materials will be covered, but in-depth treatments will be left to follow-on courses.

Module Structure

Title / TopicsTotal Learning

Hours

UNIT 1 Overview of Financial ManagementFinancial Objective of FirmsThe Financial Environment: Markets,

Institutions and Interest RatesRisk and Return:

Measuring risk and returnRisk-return trade-off

Financial Statement Analysis

40

UNIT 2 Time Value of MoneyCompounding & DiscountingPresent & Future ValueAnnuity

Valuation of AssetsGeneral Valuation ModelBond ValuationStock Valuation

Capital BudgetingNet Present Value (NPV)Profitability Index (PI)Internal Rate of Return (IRR)Modified Internal Rate of Return

(MIRR)

Conflict between NPV & IRR

Cash Flow Estimation and Other Topics in Capital Budgeting

Risk Analysis in Capital BudgetingThe Cost of Capital

Component cost of debt and equityWeighted average cost of capital

40

UNIT 3 Capital Structure Decisions: The BasicsTraditional View of Capital StructureAlternative view of Capital Structure

Dividend Decisions: The BasicsLong-Term Financing Decisions

Long-Term LoansPreference SharesOrdinary Shares

Working Capiral Management (WCM)Current Asset ManagementCurrent Liability ManagementRisk-Return Trade-off in WCM

40

TOTAL 120Reference Compulsor

yBrigham, E.F., Gapenski, L.C. and Ehrhardt, M.C.

(2002), Financial Management: Theory and Practice, Harcourt College Publishers, 10th Edition.

Additional Copeland, T.E. and Weston, J.F. (2003), Financial Theory

and Corporate Policy, 3rd Edition, Addison Wesley.

Van Horne, J.C.(2002), Financial Management and Policy, 12th Edition, Prentice-Hall, 11e.

Gitman, L.(1997), Managerial Finance, 8th edition. Addison-Wesley.

Brealey, R.A. and Myers, S.C.(2003), Principles of Corporate Finance, McGraw-Hill International, 5e.

Bank Negara Malaysia (1999), The Central Bank and the Financial System in Malaysia - A Decade of Change 1989-1999, Bank Negara Malaysia.

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