Advanced Financial Management MGNE 3309

Course description:

This course is designed to provide the student in the undergraduate level with issues and techniques to develop skills in analyzing financial statements in order to interpret financial statements and provide useful information for decision making. 
This will be accomplished using five steps: 
(1)analyzing the industry and economic environment in which the firm operates; 
(2) analyzing the firm's business strategy and accounting choices; 
(3) analyzing recent financial performance and position; 
(4) analyzing profitability and risk; and 
(5) estimating the value of the firm.  
The module provides tools for accountants, financial analysts, corporate managers, consultants and investment bankers to assess the value of businesses and traded securities in global markets based on the information extracted from financial statements. 
This course also covers other advanced issues in finance such as theory of capital structure and distributions to shareholders either in the form of cash dividends or stocks repurchases, Working Capital Management, Cash, Inventory, Receivables management.

Course Aims:

Upon completion of the course, students will be able to:
  • Understand the characteristics of financial statements and economic environment.
  • Recognize the limitations of financial statements.
  • Discuss the need for comparative analysis.
  • Identify the tools of financial statement analysis.
  • Analyze firm's liquidity, profitability, and solvency.
  • Forecasting the value of firm.
  • To know financial analysis tools.

Course outcomes:

By the successful completion of this unit, students will be able to:
  • Knowledge and understanding. 
  • Ability to critically appreciate the use of financial statements and explain why free cash flow has such an important effect on firm value.
  • Explain what ratio analysis is and understanding of different uses of analytical techniques.
  • Explain how different amounts of current assets and current liabilities affect firms’ profitability and thus their stock prices.
  • Explain how companies decide on the proper amount of each current asset.
  • Cognitive skills (thinking and analysis).  
  • Discuss optimal distribution policy and Describe Dividend Payment Procedures. 
  • Discuss how companies set their credit policies and explain the effect of credit policy on sales and profits.
  • Formulate and logically defend a position in regard to current issues, such as corporate control and governance, which confront corporations today.
  • Understand and determine the optimal capital structure.
  • Practical and subject specific skills. 
  • Estimate a firm’s free cash flow.
  • Calculate, and interpret the key financial ratios and Compare the firm’s ratios with those of other firms. 
  • Analyze a given firm’s ratios over time (trend analysis).
  • Setting the target distribution level using the Residual Distribution Model.
  • Compute the cash conversion cycle and setting the target cash and Inventory balances using Economic Order Quantity EOQ Model.
  • Determine costs of trade credit, bank loans, and commercial paper.