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Lecturer Contact information

Name of Lecturers: Twila-Mae Logan (TML) & Martin Nesbeth (MN)

Office address: Room 8 MSBM (South) (TML)

Office hours: Tuesdays 3:00pm – 4:00pm (TML)

E-mail address: twilamae.logan@uwimona.edu.jm

Appointment: 977-3775/3808/6960, (TML); (email) or as agreed in lectures (MN)

Course Details

Class Times: Tuesdays: 12noon-2pm (SR10) & Wednesdays: 8–9am (SR16) [M11]

Mondays: 7-9pm(SR10) & Wednesdays: 8–9pm (SR16) [M12]

No. of credits: 3

Semester: Semester II 2016-2017

No. of contact hours : 39 hours

Pre-requisite: Financial Management I – MGMT 2023

Course Description & Rationale Finance is an exciting, challenging, and ever-changing discipline. Financial Management II

is an advanced managerial finance course that ties together theory and applications of financial

management; covering the essential aspects of financial decisions. Financial decisions are primarily

concerned with providing solutions to the following problems: (1) what assets should the enterprise

acquire? (this is the capital budgeting decision); (2) how should these assets be financed? (this is the

capital structure decision); and (3) how should short-term operating cash flows be managed? (this is

the working capital decision).

This course focuses predominantly on learning the tools and techniques needed to analyze

and evaluate financial information. This type of analysis enables the financial manager to identify

and solve management problems related to the financial operations of business corporations. It

builds on the basic principles covered in the first course in Financial Management.

Learning Outcomes:

Upon completing this course, students should be able to:

1. Analyze cash flows for investment projects by

a. Forecasting incremental cash-flows.

b. Incorporating inflation and risk analysis in the capital budgeting decision making

process.

2. a. Describe the characteristics of the non-financial firm

b. Use these characteristics to determine the optimal capital structure

Financial Management II - MGMT3048

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c. Explain how the optimal capital structure influences firm value.

3. Describe how tax consideration and clientele effects affect the firm’s dividend policy.

4. Understand the working capital policy of the firm by

a. Using the cash conversion cycle measure the efficiency of the firm

b. Explaining the use of self-liquidating to manage liquidity.

c. Determining the factors that are used to shape the firm’s short term investment

strategy.

5. Explain the risk inherent in the foreign exchange market and how this risk impacts

international capital budgeting decisions.

6. Use different techniques (insurance derivatives) to hedge firm risk.

Mode of Delivery: Face to Face

Required Textbook: Financial Management – Principles and Applications(12th Edition - International) Titman, Keown & Martin, Prentice Hall (Pearson Education Inc.), 2014 with MyFinanceLab

Recommended Reading: Financial newspapers and magazines

Pedagogy: Lecture presentations will generally consist of notes (presentation, slides, and blackboard)

and in-class discussions and problem solving. Students are expected to attempt the review questions

(theoretical) at the end of the relevant text chapters. (Students must reacquaint themselves with the

material covered in Financial Management I if they are to properly grasp the concepts and

techniques presented here).

The teaching/learning process will be interactive to a large extent, thus students should make

an effort to read/scan the topic to be covered before class..

All course material (course outline, class notes, tutorial sheets, and tutorial sheet solutions)

may be accessed on the University’s Virtual Learning Environment website (OurVLE):

http://ourvle.mona.uwi.edu

Assignments Description of assignments: Students will be required to complete the Bloomberg Market

Concepts in the MSBM Finance lab.

Category Topics Examined* Percentage (%) Format

Homework Bloomberg Market

Concepts 10

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Course Content & Schedule

TOPIC BY WEEK READINGS*

Weeks 1-3

Preliminaries

A. Some Complications in Capital Budgeting

Analysis

Choosing among Mutually Exclusive Projects

with unequal lives. Forecasting cash flows Measuring and adjusting for Risk in Capital

Budgeting decisions. Business Risk and Operating Leverage Real Options in Capital Budgeting

Chap. 11:

pgs. 362-368 Chap. 12 Chap. 13

Week 4-5

B. Capital Structure and Leverage Chap. 15

Mid-term exam A, B & C 30 (MCQ)

Final exam All Topics 60 Essay/Problem

Class Attendance: Students are expected to attend class regularly and to keep abreast of any changes in lecture

schedules, and test dates. Students will be held responsible for all work covered in the class for

which they have enrolled. Failure to attend class may jeopardize a student’s academic standing.

Marking Scheme

GRADE

Mark as a %

GRADE

Mark as a %

A+ 90 – 100 C+ 55 – 59

A 80 – 89 C 50 - 54

A- 75 - 79 F1 45- 49

B+ 70 - 74 F2 40 – 44

B 65 – 69 F3 0 – 39

B- 60 - 64

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Financial Risk and Financial Leverage

Capital Structure Theory Determining the Optimal Capital Structure EBIT-EPS Indifference Analysis

Weeks 6-7

C. Dividend Policy

Dividend Policy Theories Other Dividend Policy Issues and Dividend

Payment Procedures Stock Dividends, Stock Splits, and Stock

Repurchases

Chap. 16

Weeks 8-9

D. Working Capital Management

Working Capital Management &Policy Short-term Financing Management of Cash and Marketable

Securities Accounts Receivables and Inventory

Management

Chap. 18

Weeks 10-11

E. International Business Finance

Foreign Exchange Markets & Transactions Interest Rate & Purchasing-Power Parity Capital Budgeting for Foreign Direct

Investment

Chap. 19

Weeks 12-13

F. Corporate Risk Management

The Risk Management Process Instruments used in Managing Corporate

Risk Exposure – Insurance Contracts & Derivatives (Forwards, Futures, Options &

Swaps)

Chap. 20

* All references are from the prescribed text, unless otherwise stated.

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Office of Special Student Services: The University of the West Indies at Mona provides special accommodations for students with

special needs. Services are provided as needs are identified and include assistance for the hearing

impaired and those with physical disabilities. If you have a disability for which you believe you

require services, please contact your respective program coordinator.

Examination: A student who does not take an examination in a course for which he or she is registered is deemed to

have failed the examination unless permission to be absent was granted. A student who on the grounds

of illness or in other special circumstances referred to in examination Regulation 25, fails to take an

examination in a course for which he or she is registered may be given special consideration by the

board of examiner to take the examination at the next available opportunity, without penalty,

(Faculty of Social Science Student handbook 2013-2014).

Academic Integrity: Cheating

Cheating is any attempt to benefit oneself or another by deceit or fraud. Plagiarism is a form of

cheating. Plagiarism is the unauthorized and unacknowledged use of another person’s

intellectual efforts, ideas and creations under one’s own name howsoever recorded, including

whether formally published or in manuscript or in typescript or other printed or electronically

presented form. Plagiarism includes taking passages, ideas or structures from another work or

author without attribution of such source(s), using the conventions for attributions or citing used

in this University. Since any piece of work submitted by a student must be that student’s own

work, all forms of cheating, including plagiarism, are forbidden (Faculty of Social Sciences,

Undergraduate Handbook).

CODE OF CONDUCT: 1. During the conduct of any class, there shall be no activity which disturbs the assembly

and affects the order of the proceedings. Instructors have the right to require any student

to leave the classroom if she/he is involved in disorderly conduct, or alternatively

instructors have the right to leave the classroom themselves.

2. Cell phones, pagers and alarms of any type shall be turned off during classes. If there is

an emergency for which a student or instructor may need to use the phone, this shall be

indicated at/or just prior to the start of the class in a manner indicated by the instructor.

(Code of Conduct: Faculty of Social Sciences undergraduate handbook. University of the

West Indies 2013-2014).

Student’s Responsibility:

Obtain a copy of the student handbook and familiarize yourself with code of student conduct

Obtain a copy of the course outline from your instructor.

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Read the textbook and other assigned readings prior to the start of class.

Attend all classes.

Participate as fully as possible in class discussions.

Be punctual for class.

Observe due dates for assignments

Respect the rights of others.

Adhere to the highest standards of academic integrity

Respect university property and the property of others

Practice good health and safety habits

Comply with the standards, rules, and regulations of the University

Instructor’s Responsibility:

Be fair and impartial to all students. Hold office hours for students to discuss issues and questions relating to the course Ensure that the course is delivered at the highest level of academic standard. Ensure that sufficient and relevant material is made available for students. To be punctual at all times (except in extenuating circumstances). Maintain ongoing consultation with the students to ensure that the course is meeting

the needs of the students at all times.

Adapted from the Instructional Development Unit template & FSS Grad Course Checklist