UNIT 406: CORPORATE FINANCE

Overview

This unit extends the material developed in Unit 101 and, to a lesser extent, Unit 201. It is designed to equip you with a sufficient understanding of corporate finance to be able to discharge the financial responsibilities of a director or senior executive of a public company when making decisions and releasing information. It will also equip you with an adequate understanding of the calculations that members of the CFO's office will carry out and the evaluation processes that they will undertake when examining business proposals. This will assist you in presenting a financial case for the pursuance of business initiatives you believe a corporation should undertake.

Aims

After studying this unit you should be able to:

• explain how the corporate finance function is exercised by modern listed public companies
• identify, understand and analyse the factors relied on, and the calculations made, by corporate finance officers when assessing investments
• propose and critique the capital structure of a listed public company or one of its subsidiaries
• explain how currency and other risks implicit in international trade are identified and managed
• use common theories in financial economics to avoid financial ruin.

Topics

• Time value of money
• Valuing debt and equity
• Capital budgeting
• Risk premium—using the CAPM
• Using Real Options theory
• Financial markets
• Cash and liquidity management
• Long-term finance and gearing
• International corporate finance
• Risk management

Unit Chair & Study Guide Author

John Legge
BS, MBus

John Legge started tertiary level teaching after 28 years’ experience in technology-oriented business, including four years as a corporate business strategist for a multinational computer firm. His business career included extensive periods in the UK and Australia, and involved technical and marketing assignments in 9 other countries. Since 1988 John has concentrated on consulting, research, writing and teaching.

Nine of his books have been published, and he has completed a number of significant research papers. John was Lecturer in Innovation and Entrepreneurship at Swinburne University between 1991 and 1996 and taught at RMIT Graduate School of Engineering in 1997 and in the Graduate School of Management, La Trobe University, from 1999 to 2002. He is currently a Senior Teaching Fellow, Ballarat University and a Teaching Fellow, Swinburne University of Technology where he convenes the subject 'Growth Venture Evaluation' in the Australian Graduate School of Entrepreneurship. He is the principal consultant in his family consulting business.