BSQA603 – Business Finance
Module code
BSQA603
Module title
Business Finance
Prescription
Students will apply financial management knowledge and skills to a small or medium size business for decision-making purposes.
Programmes
- BS0864
- BS8906
NZQA Level
Level 6
NZQA Credits
20
Delivery method
- Web-Enhanced
Learning hours
- Directed hours
- 64
- Self directed hours
- 136
- Total learning hours
- 200
Resources required
- Content
- Students will apply financial management knowledge and skills to small and medium size entities for decision-making purposes.
- Learning Outcomes
- Learning outcome one
Students will examine the role of business finance in small and medium entities, and the business finance environment.
Key elements:
a) The role of financial management.
b)The impact of stakeholder demands and agency theory (including ethical considerations) on the financial goals of a firm.
c) Business finance environment:
institutions
regulations
economic factors.
Learning outcome two
Students will apply capital budgeting techniques and evaluate investment decisions.
Key elements:
a) Capital budgeting techniques:
time value of money:
annuities and mixed stream
Net Present Value (NPV)
Internal Rate of Return (IRR)
one of:
payback
discounted payback
profitability index.
b) Critical factors influencing investment decisions:
capital rationing or unlimited funds
independent or mutually exclusive projects
expansion or replacement projects.
c) Accounting for risk on investment decisions:
expected return
standard deviation
coefficient of variation
one of:
risk adjusted discount rates
sensitivity analysis
scenario analysis.
Learning outcome three
Students will apply working capital management techniques to manage the finances of a business.
Key elements:
a) Working capital management:
conservative strategy
aggressive strategy.
b) Cash management.
c) Accounts receivable management:
criteria for effective accounts receivable management
changes in credit policy.
d) Inventory management and control methods.
e) Accounts payable management.
Learning outcome four
Students will compare and contrast financing options, and make recommendations for given business situations.
Key elements:
a) Short term financing, three of:
bank overdrafts
loans
commercial bills
accounts receivable financing
factoring of debtors
inventory financing.
b) Long term financing, two of:
loans
mortgages
convertible notes
subordinate debts
share issues.
c) Lease versus buy decision:
financial factors
non-financial factors.
Learning outcome five
Students will examine capital structure and cost of capital, and calculate the cost of capital.
Key elements:
a) Debt and equity consideration:
financial factors
non financial factors.
b) Weighted Average Cost of Capital (WACC). Three of:
debt
equity
preference shares
retained earnings.
c) Cost of capital:
Capital Asset Pricing Model (CAPM):
Validity discussion.
d) Capital structure decisions:
determination of optimal capital structure
operating leverage and business risk
financial leverage and financial risk.
Learning outcome six
Students will assess the inter-relationship of financial management issues for a given business situation and provide recommendations.
Key elements:
a) Factors to be considered:
feasibility/viability
financing options
working capital management impact.
