Basic Financial Management Course

Lesson 1 • The Financial Environment

Maps the financial system: markets, institutions, and instruments that channel funds. Shows how external conditions shape internal financial decisions.

Lesson 2 • Organisational Goals and Financial Objectives

Examines profit maximisation vs. shareholder wealth maximisation as competing goals. Connects goal-setting to ethical and stakeholder considerations.

Lesson 3 • What Financial Management Does

Defines financial management and its three core decisions: investment, financing, and dividends. Anchors the chapter by framing every subsequent topic within these decisions.

Lesson 1 • The Income Statement

Covers revenue recognition, expense classification, and net income calculation. Establishes the baseline for profitability analysis used throughout the course.

Lesson 2 • The Balance Sheet

Explains assets, liabilities, and equity structure and the accounting equation. Provides the snapshot of financial position needed for ratio analysis.

Lesson 3 • Common-Size and DuPont Analysis

Applies common-size statements and the DuPont framework to decompose performance drivers. Enables deeper diagnosis beyond single-ratio snapshots.

Lesson 4 • The Cash Flow Statement

Distinguishes operating, investing, and financing cash flows and their significance. Demonstrates why cash flow differs from reported profit.

Lesson 1 • Core Time Value Concepts

Explains why a pound today is worth more than a pound tomorrow using opportunity cost logic. Establishes the conceptual foundation for all discounting and compounding.

Lesson 2 • Annuities and Perpetuities

Covers ordinary annuities, annuities due, and perpetuities with practical shortcuts. Prepares learners for loan, bond, and stock valuation calculations.

Lesson 3 • Loan Amortisation

Builds amortisation schedules showing interest and principal splits over time. Directly applicable to mortgage, auto, and business loan analysis.

Lesson 4 • Present Value and Discounting

Derives present value by reversing compounding and introduces the discount rate concept. Links discounting directly to investment valuation in later chapters.

Lesson 1 • Capital Asset Pricing Model

Derives the security market line and beta as a measure of systematic risk. Enables required return estimation for any asset given market conditions.

Lesson 2 • Measuring Return

Defines holding-period, arithmetic, and geometric returns and when each is appropriate. Provides the return metrics used in all subsequent risk-return comparisons.

Lesson 3 • Risk-Adjusted Performance Measures

Applies Sharpe, Treynor, and Jensen's alpha to evaluate investment performance. Connects risk measurement to practical portfolio evaluation and manager assessment.

Lesson 4 • Measuring Risk

Introduces variance, standard deviation, and coefficient of variation as risk measures. Establishes the statistical toolkit for portfolio and asset analysis.

Lesson 1 • Yield Measures and Bond Risk

Calculates yield to maturity, current yield, and duration as a risk measure. Prepares learners to compare bonds and manage interest rate exposure.

Lesson 2 • Bond Valuation Basics

Prices bonds by discounting coupon payments and par value at the required yield. Establishes the inverse price-yield relationship central to fixed-income analysis.

Lesson 3 • Relative Valuation Multiples

Uses price-to-earnings, price-to-book, and EV/EBITDA multiples for comparative valuation. Complements intrinsic models with market-based benchmarks.

Lesson 1 • Capital Rationing and Project Ranking

Applies profitability index to rank projects under budget constraints. Addresses real-world scenarios where unlimited capital is unavailable.

Lesson 2 • Capital Budgeting Process and Cash Flows

Defines the project evaluation cycle and identifies relevant incremental cash flows. Correct cash flow identification is the prerequisite for all evaluation methods.

Lesson 3 • Net Present Value Method

Calculates NPV by discounting project cash flows at the cost of capital. Establishes NPV as the primary decision rule for value-maximising investment.

Lesson 4 • Internal Rate of Return and Payback

Computes IRR and payback period and identifies their strengths and pitfalls. Contrasts these methods with NPV to guide correct application.

Lesson 1 • Component Costs of Capital

Estimates the after-tax cost of debt, preferred stock, and common equity separately. These components feed directly into the WACC calculation.

Lesson 2 • Determining the Optimal Capital Structure

Identifies the debt-equity mix that minimises WACC and maximises firm value. Applies theory to practical financing decisions using EBIT-EPS analysis.

Lesson 3 • Capital Structure Theory

Examines Modigliani-Miller propositions and the trade-off theory of capital structure. Provides the theoretical basis for financing decisions.

Lesson 4 • Gearing and Its Effects

Quantifies operating, financial, and combined gearing and their impact on earnings volatility. Connects gearing decisions to risk management and investor expectations.

Lesson 1 • Cash and Liquidity Management

Applies the Baumol and Miller-Orr models to optimise cash balances. Covers float management and short-term investment of surplus cash.

Lesson 2 • Short-Term Financing Sources

Evaluates trade credit, bank lines, and commercial paper as short-term funding options. Enables learners to select the lowest-cost financing for current asset needs.

Lesson 3 • Inventory Management

Uses EOQ and safety stock models to minimise total inventory costs. Links inventory decisions to operating cycle length and working capital needs.

Lesson 4 • Accounts Receivable Management

Designs credit policies by balancing incremental revenue against collection costs and bad debt. Directly affects the cash conversion cycle and profitability.