Financial Management: Introduction Lecture

Overview

• Lecture by Jon Moffitt from Open Tuition
• Introduction to financial management syllabus
• Importance of downloading lecture notes for future calculations

Exam Structure

• 50% arithmetic and calculations
  • Some calculations are straightforward
  • Others are complex and require practice
• 50% written explanations
  • Section C: Long-form questions with parts requiring explanation
  • Sections A & B: Multiple choice questions testing understanding

Role of a Financial Manager

• Focused on the long-term position of the company
• Not primarily concerned with past financial reports or short-term budgeting

Key Areas of Financial Management

1. Raising Long-Term Finance

   • Need for finance to expand (e.g., building a new factory)
   • Raising money through shareholders or long-term loans
   • Understanding the cost implications of different financing methods

2. Investment Decision Making

   • Assessing the viability of investments (e.g., new factories, machines)
   • Importance of discounted cash flow and net present value analysis

3. Management of Working Capital

   • Concerns current assets and liabilities (e.g., receivables, inventories)
   • Developing long-term policies for receivables and payment terms
   • Strategies for managing cash flows efficiently

4. Management of Risk

   • Exchange Rate Risk: Issues arising from international trade and currency fluctuations
   • Interest Rate Risk: Variability in borrowing costs due to changing interest rates
   • Developing strategies to mitigate these risks

Course Emphasis

• Emphasises understanding concepts over rote learning
• Utilises a formula sheet during exams
• Covers a broad range of topics under the four main areas
• Lectures are designed to thoroughly explore each topic

Conclusion

• The course may appear simple but requires understanding of many topics
• Success involves grasping both calculation and theoretical concepts
• The lecture was an introductory overview of the course syllabus