Financial Management: Make Sense of Business Finance

Name: Financial Management: Make Sense of Business Finance
Rating: 4.1 (27 reviews)

Follow the money: understand cash, weigh investments and connect funding choices to business value.

Created byRowan Malherbe

Last updated 6/2018

English

English [Auto],

What you'll learn

Explain the purpose of financial management and the role of financial markets.
Discuss working capital management and the choices involved in financing working capital.
Explain investment appraisal methods and the effects of inflation, tax and sensitivity assumptions.
Compare sources of finance and explain dividend policy, the cost of capital and valuation principles.

Course content

1 section • 12 lectures • 1h 49m total length

Introduction and objectives of financial management9:00
Learn how financial management aims to maximize shareholder wealth through planning, funding, and control of resources, balancing earnings, dividends, and risk with strategic alignment.
The financial environment
Financial markets7:53
Discover how financial markets and money market instruments shape banking profits through deposits, interest, and leveraging assets and liabilities, with instruments like bonds, commercial paper, and repos.
Working capital and its management15:41
Explore working capital management by optimizing inventory, data, and creditors management. Improve cash flow and short-term liquidity through the operating cycle and cash conversion cycle.
Working capital financing11:20
Explore working capital financing to improve day-to-day liquidity through internal funding, short-term borrowings, or rights issues, while managing inventory and cash flow forecasts to sustain profitability.
Investment appraisal13:35
Explore investment appraisal techniques for non-current assets, emphasizing relevant cash flows, cost of capital, time value of money, and methods like NPV, IRR, payback, and ARR.
Inflation and tax allowances8:46
Explore how inflation and tax allowances shape capital investment decisions, distinguishing real vs nominal cash flows, synchronized inflation, and calculating NPV with depreciation and tax relief.
Risk and sensitivity8:34
Assess business and financial risk, uncertainty, and risk appetite, and analyze capital investments with sensitivity and probability analyses, including net present value and operating leverage concepts.
Financing and sources of financing4:34
Examine how to select financing sources—leases, loans, bonds, equity, venture capital—and assess terms, after-tax cost of borrowing, and cash-flow implications for asset funding.
Dividend policy10:29
Understand how dividend policy balances retention and payouts, retention ratio, and growth potential, while signaling and clientele effects influence investor expectations and capital structure.
Cost of capital9:12
Understand the cost of capital as the weighted average of equity and after-tax debt, setting returns for value and guiding investment via capm and the Gordon growth model.
Valuations10:26
Discover methods to value a business under going concern and liquidation bases, using asset based value, discounted cash flow for majority stakes, and dividend or earnings yield for minority stakes.

Requirements

Basic familiarity with accounting terms, percentages and financial statements is recommended.
Have a calculator and somewhere to record your workings and assumptions.

Description

See the decisions behind the numbers

A business can make a profit and still struggle for cash. An attractive investment can look different once funding costs enter the picture. This course helps you make sense of those connections, bringing working capital, investment, financing and valuation into one financial-management story.

Connect cash, investment and business value

Start with the objectives of financial management and the financial markets in which businesses operate. Then move to working capital and its financing: the resources needed to keep day-to-day operations running and the choices involved in funding them. These topics provide a useful foundation for thinking about the relationship between liquidity and longer-term investment.

The investment section covers appraisal, inflation and tax allowances, followed by risk and sensitivity. Later lectures examine sources of finance, dividend policy and the cost of capital before turning to valuation. The emphasis is on understanding the purpose of each technique and how its assumptions affect the meaning of a calculation.

Build a method you can explain

To make your study active, keep a record of the assumptions behind each method. Pause when a calculation is introduced, write down the steps and explain the result in your own words. If two methods suggest different conclusions, identify what each method measures before deciding how to interpret the difference.

Put the foundations to work

The course is suitable for accounting and finance learners and people looking for a structured introduction to business finance decisions. Familiarity with basic accounting and percentages will help. ACCA FM students can use the listed topics for supplementary study alongside their current syllabus and exam practice. The material is educational and is not individual investment advice.

Availability note: Lecture 2, “The financial environment”, is currently unavailable for playback.

Start with the finance function, then follow each decision through to its assumptions and consequences.

Who this course is for:

Accounting and finance learners studying investment, funding and valuation concepts.
Learners seeking an introduction to the financial decisions made within a business.
ACCA FM students seeking supplementary tuition in investment, funding and valuation.