Overview

The CBiT Business Finance course is designed to provide a foundation for understanding financial decision-making and valuation for effective management of business finance. The course looks at the essential aspects of financial decision-making. The course begins by examining the different ways in which companies can be structured and the differing types of ownership that exist. The role of the financial manager within an organization and the roles of financial markets is then used to provide a unified framework for all the topics discussed later in the course.

The course emphasizes the problems faced by a financial manager within an organization, looking at financial markets and their role in pricing a firm’s securities and determining the cost of capital. It examines financial cash flows, emphasizing the importance of cash flows to firm value and the difference between cash flows and accounting measures of firm performance. Afterwards, the principles and applications of financial mathematics are introduced, including the time value of money and the law of one price. Finally, we look at net present value and how firm managers should decide which potential projects to pursue.

The above is followed with an examination of firms from the perspective of financial markets. We begin by looking at the types of financing available to a firm and how equity and debt capital are raised in practice. Portfolio theory is used to provide a foundation for determining the relationship between expected risk and returns in financial investments. We then examine how financial markets determine the overall cost of capital for a firm. Dividend payouts and the choices between debt and equity financing are also covered.

This course develops distinct conceptual frameworks and specialised tools for solving real-world financial problems at both the personal and corporate level. Illustrations from real-life corporate practices are used to highlight the importance and relevance of financial management to the realisation of personal and corporate financial objectives. Examples include personal financial planning, funds management, capital raisings, portfolio selection of financial securities, private equity, public floats, and the pricing of assets in the stock market.