ADDIS ABABA UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOUNTING AND FINANCE
Course Outline
Course Title: Financial Management (ACFN 632) A.Y.: 2022/23
Instructors:
Email:
COURSE DESCRIPTION:
The aim of this course is to provide a rigorous ground in the practice of financial
management. The most important topics it includes are foundations of finance, financial
planning and analysis, valuation of financial assets, short-term financing, long-term
financing, investment decisions /capital budgeting/, capital structure, dividend policy, and
financial planning.
LEARNING OUTCOMES
Upon completion of the module, you should:
1. advanced knowledge and critical understanding of essential components of modern
finance theory and associated current research;
2. demonstrated ability to learn and work independently in corporate finance, exercising
critical judgment and discrimination in the resolution of complex problematic
situations;
3. used highly specialized and advanced technical, professional and academic skills in
the analysis of relevant specific problems in corporate finance;
CONTENT AREAS
1. Overview of Financial Management:
1.1. Definition of Financial Management
1.2. Scope of Finance
1.3. Financial Management Decisions
1.4. Goal of the Firm: Profit vs. Wealth
1.5. Role of Corporate Finance Manager
1.6. The Agency Relationship
2. Assessing the Financial Health of A firm
2.1 Overview of the basic financial statement
2.1.1 The Balance Sheet
2.1.2 The Income Statement
2.1.3 Statement of Retained Earnings
2.2 Interpretation and analysis of financial ratios
2.2.1 Performance ratios /profitability, activity and return on capital ratios/
2.2.2 Liquidity ratios /working capital analysis/
2.2.3 Analysis of capital structure
2.2.4 Valuation ratios and analysis for the investor
3. Planning Future Financial Performance:
3.1 Financial Forecasting
3.2 Pro Forma statements and financial planning
3.4 Managing Growth
4. Valuation of Financial Assets:
4.1 Introduction to the time value of money
4.2 Cost of Capital
4.2.1 Specific
4.2.2 Weighted average
4.3 Bond Valuation
4.4 Stock Valuation
4.4.1 Common stock valuation
4.4.2 Preferred stock valuation
5. Risk and Return
5.1 Introduction to risk and return
5.2 Standalone risk and return
5.3 Risk and return of a portfolio
6. Investment Decisions /Capital Budgeting decisions/:
6.1. The concept of capital budgeting
6.2. Investment appraisal techniques
6.3. Non-Discounting Cash Flow Techniques
6.4 Discounted Cash Flow Techniques
6.5 Comparison of IRR and NPV
7. Long-term Financing and capital structure
7.1 Long-term Financing
7.1.1 Equity financing
7. 1.2 Debt financing
7.1.3 Hybrid financing
7.1.4 Lease financing
7.2 The concept of capital structure
7.3 Theories of capital structure
8. Dividend Policy
8.1 Concepts of dividend
8.2 Dividend theories
TEACHING STRATEGY
The strategy of teaching will constitute: interactive, self-study, and collaborative approaches.
Hence, there will be
Classroom lecture-an instructor will deliver discussions in class. He/she will bring ideas and
concepts for discussion in class and students will ask questions and give answers as the case
requires.
Self-study/ independent learning-students will be directed to specific topics to work on and
deliver.
Collaborative learning will be there to help students work on groups on assignments.
MODULE/COURSE/ REQUIREMENTS
Minimum attendance of 80% of the session is required
Working on individual reading assignment is essential
Working on group assignments and submitting of results and participating on discussion on
the same in class is also a requirement.
ASSESSEMENT & EVALUATION
Student assessment [Group Assignment]
There will be work prepared for seminars which will include answers to specific pre-assigned
questions, and group presentations and discussion of also pre-assigned readings and case studies.
Overall grading will follow the following scheme:
1. Material preparation and presentation: Each group will be required to choose one topic/chapter
based on the course outline, discuss throughly with group memebres finally you will present that
chapter in the class for the rest of the student and report based on a summary of the reading and
comprehesion of essential ideas there in and should sumit it to the instructor. (30 Marks)
2. Project Work:Each group will be also required to choose an organizaiton to write its real finncial
management practice and its evaluation and submit the final type written report to the instructor on
Date of Submission (20 Marks).
Submission Date; January 30, 2022
Final Examination…. ………..………………………………… 50%
MAJOR TEXTS AND REFERENCES:
1. Brigham and Houston. “Fundamentals of Financial Management”. South-Western
CENGAGE Learning, 12th Ed
2. Gitman, L.J. “Principles of Managerial Finance”. 10th Ed.
3. Higgins, Robert. “Analysis for Financial Management” McGraw Hill
OTHER READING MATERIALS
1. Brealey Myers, “Principles of Corporate Finance”. 9th edition, McGraw Hill, 2008.
2. Damodaran, Aswath. “Applied Corporate Finance” 3rd Ed. Or Latest
3. Eugene F. Brigham and Phillip R. Daves “Intermediate Financial Management” 10th edition
4. Ross, Westerfield and Jaffe. “Corporate Finance” McGraw Hill/Irwin, 6th Ed. SOUTH-
WESTERN CENGAGE Learning'
5. Stephen A. Ross & Bradford D .Jordan “Essentials of corporate finance” McGraw Hill/Irwin
3rd Edition
6. Van Horne, J. C. and Wachowicz, J.M. “Fundamentals of Financial Management” Pearson
Education, 13th Ed.
7. Van Horne, James C. “Financial Management and Policy”, 10th Ed. Or latest, Prentice-hall
Pearson Education
