| 1.
Financial objectives (a)
The nature, purpose and scope of financial management.
(b)
The relationship between financial management, management accounting
and financial accounting.
(c)
The relationship of financial objectives to organisational strategy
and ethos and to other organisational objectives. The constraints/conflicts
which different objectives may put upon each other.
(d)
The nature, scope and form (long term and short term) of financial
objectives of different types of organisation, including not-for-profit
organisations.
(e)
The roles, responsibilities and relationships of key personnel
involved in and with organisations (shareholders, lenders, managers,
employees, customers, suppliers, government).
2.
Financial management framework
(a)
The commercial and financial environment in which organisations
operate (the nature and function of the money and capital markets
including banks and other financial intermediaries, the Stock
Exchange and Over the Counter markets.
(b)
The economic environment in which organisations operate
•
Application of macro-economic theory as a basis for understanding
the key economic variables affecting the business environment
•
Fiscal policy, its nature, effectiveness of fiscal policy
•
Money and interest rates, the role of money in the economy, the
supply and demand for money
•
Monetary policy, attitudes to monetary policy, problems of monetary
policy
•
Supply-side policies, supply side problems, policies to improve
supply side
•
Policies towards monopolies and oligopolies, privatisation and
deregulation
•
Green policies; implications for management of the economy and
the firm
•
The significance of corporate securities (share capital, debt
and preference shares) to commercial organisations and the markets
in which they operate, and the influence of markets on organisations
• The Efficient Market Hypothesis and its relevance to decision
making and to financial management practice.
3.
Management of working capital
(a)
The nature and scope of working capital management.
(b)
The importance of effective working capital management to corporate
survival.
(c)
Cash: selection of appropriate cash balances, managing cash surpluses
and deficits. The nature and functions of the short term money
market.
(d)
The management of debtors (including those overseas) involving
credit evaluation, terms of credit, cash discounts, debt collection
techniques, credit management monitoring and evaluation, factoring
and invoice discounting.
(e)
Creditors: advantages and disadvantages of alternative methods
of paying suppliers (including those overseas), the dangers of
trading on credit.
(f)
Stock: alternative stock management systems and models including
Total Quality Management (TQM), Just in Time (JIT), Economic Order
Quantity (EOQ), etc.
4.
Sources of finance
(a)
Sources and relative costs (including issue costs but not calculations
of the cost of capital) of various types of finance and their
suitability to different circumstances and organisations (both
large and small companies, listed and unlisted) including
•
The nature and importance of internally generated funds
•
Capital markets (types of share capital, new issues, rights issues,
loan capital, convertibles, warrants)
•
The effect of dividend policy on financing needs
•
Bank finance (the various forms of short, medium and long term
finance that are available, including leasing)
•
Trade credit
•
Government sources: grants, regional and national aid schemes,
tax incentives etc
•
Venture capital and financial sources particularly suited to the
small company
•
International money and capital markets, including an introduction
to international banking, and the finance of foreign trade.
(b)
Determining requirements for finance (how much, for how long,
for what purpose) in relation to a client’s operational
and strategic objectives. The importance of the choice of capital
structure to an organisation.
(c)
Calculating financial gearing and other key financial ratios and
analysing their significance to the organisation.
(d)
Determining appropriate sources of finance by identifying and
evaluating appropriate sources, taking into account such factors
as
•
Cost of finance including its servicing
•
Timing of cash payments
•
Effect on gearing and other ratios
•
Effect on the company’s existing investors.
(e)
Establishing the principles and processes involved in managing
the treasury function within an organisation
•
Centralised vs decentralized
•
Cost center vs profit centre
5.
Capital expenditure and investment
(a)
Identifying potential investment opportunities.
(b)
Appraising capital investments (domestic) for commercial and non
commercial organisations through the use of appropriate methods
and techniques
•
Return on capital employed and payback
•
Discounting back methods, including the importance of the cost
of capital to investment appraisal (but not the calculation of
cost of capital)
•
Internal rate of return
•
Net present value
•
Capital rationing (single and multi-period)
•
Lease or buy decisions
including
the effects of taxation and inflation on investment decisions,
the handling of risk and uncertainty, eg through the use of probabilities,
sensitivity analysis and simulations.
6.
Cost of capital
(a)
Establishing the appropriate cost of capital for a company to
be used in the project appraisal process
•
Weighted average cost of capital
•
Cost of equity
-
Dividend valuation model
-
Capital Asset Pricing Model (CAPM)
-
Arbitrary Pricing Theory (APT)
•
Cost of debt
-
Securitised debt
-
Unsecuritised debt
•
Business and financial risk
7.
Treasury risk management
(a)
Establishing the products and procedures with which to manage
the risk of an international treasury function
(a)
Interest rate risk
(b)
Foreign currency risk
8.
Business and financial analysis
(a)
Determining the competitive and financial position of a company
•
Analytical review
•
Ratio analysis
(b)
Establishing the strategic possibilities for an organization which
is underperforming, partially insolvent or insolvent
(c)
Identifying the procedures required to reconstruct a potentially
insolvent organization
9.
Professional ethics and Corporate Governance
(a)
Key aspects of governance in HK and internationally.
(b)
The implications of corporate governance for organisations.
(c)
Major ethical issues affecting the conduct of business.
|