Home /LEVEL 6, UNIT 5 - CORPORATE FINANCE

LEVEL 6, UNIT 5 - CORPORATE FINANCE

Level 6, Unit 5 - Corporate Finance (25 credits)

1. Understand the role of the Corporate Finance Manager in relation to business management including mergers and acquisitions.

2. Understand the main sources of business investment funding including debt and equity and the significance of financial gearing.

3. Be able to evaluate investment decisions using a variety of analytical techniques.

4. Be able to value company shares based on an understanding of established methods of calculation.

5. Understand the factors that determine a company’s dividend policy.

6. Be able to calculate the cost of business capital and compare different sources.

7. Be able to quantify the effect of decisions related to treasury and working capital from given data sets.
1.1 Explain the actions of a finance manager to support business objectives. 2.1 Outline the process for gaining a listing on the Official List or the Alternative Investment Market. 3.1 Explain the principles, benefits and limitations of the following methods of investment appraisal: accounting rate of return, payback, net present value (NPV), profitability indices, and the internal rate of return (IRR). 4.1 Explain the share value of a business based on calculation of: net asset value (NAV), price earnings (PER), free cash flow and dividend valuation. 5.1 Describe the following dividend policies: constant dividends, increasing dividends, zero dividends and fixed percentage dividends. 6.1 Describe and calculate the cost of equity share capital. 7.1 Explain the main areas of treasury and working capital.
1.2 Describe the regulatory environment in which a finance manager operates. 2.2 Explain the roles of advisors in gaining a listing. 3.2 Perform calculations in order to assess investment value. 4.2 Compare the relative merits of each method of share valuation. 5.2 Explain the effect of dividend policies on shareholder wealth. 6.2 Describe and calculate the cost of debt capital. 7.2 Explain with the aid of calculations, the working capital cycle and the cash conversion or operating cycle.
1.3 Explain regulatory constraints on business including the City Code on Takeovers and Mergers. 2.3 Compare and contrast the sources of equity finance available to an unquoted company. 3.3 Explain and quantify risk in the investment appraisal process. 4.3 Identify the qualities of a business that are likely to influence the share value. 5.3 Explain the main dividend policy theories including irrelevance and relevance theories. 6.3 Calculate the weighted average cost of capital and analyse its usefulness. 7.3 Calculate, from a given set of figures, a working capital decision on any of the areas of working capital.
1.4 Explain the risks associated with mergers and take overs. 2.4 Explain the differences between ordinary shares, preference shares, rights issues and scrips. 4.4 Calculate the main accounting ratios that can be applied to organisations and explain their significance. 5.4 Explain the effects of dividend policies on company reserves and investment funding. 7.4 Explain overtrading and identify its symptoms.
1.5 Compare the possible benefits of merger and take overs with the associated risks. 2.5 Identify the advantages and disadvantages of ordinary shares, preference shares, rights issues and scrips. 5.5 Explain the main alternatives to cash dividends.
2.6 Identify and explain the main sources of debt finance available to businesses.
2.7 Explain financial gearing and the potential benefits and risks associated with it.