Back to: Financial Management
Hello, everyone!
Welcome to the last week of our course! This week is all about reviewing and reinforcing what we’ve learned throughout the semester. We’ll recap the key topics and concepts in financial management, clarify any doubts, and prepare for the upcoming final exam.
Lesson Objectives:
By the end of this lesson, students should be able to:
Review key concepts from the course.
Clarify any doubts or areas of confusions
Concluded review of financial management
Prepare for the final exam through discussion and practice.
Review on Financial Management
Recap of Key Topics:
Introduction to Financial Management:
Key objectives: profit maximisation vs. wealth maximisation, the role of financial managers, and basic financial principles.
Sources of Finance:
Understanding short-term, medium-term, and long-term sources.
The pros and cons of different financing options.
Time Value of Money:
Future Value (FV) and Present Value (PV) concepts.
The importance of discounting and compounding.
Investment Decision Tools:
Payback Period and Net Present Value (NPV).
Advantages and limitations of each method.
Financial Planning and Forecasting:
The importance of planning for short-term and long-term needs.
Tools for financial forecasting (sales forecasting, cash flow forecasting, pro forma statements).
Working Capital Management:
The components of working capital and its management.
Techniques for managing inventory, receivables, cash, and payables.
Capital Structure and Cost of Capital:
The mix of debt and equity.
How to calculate the cost of capital (WACC).
Factors affecting capital structure decisions.
Budgeting and Financial Control:
The types of budgets and the process of budgeting.
The role of financial control and variance analysis in performance evaluation.
Q&A Session:
Open the floor for questions and clarifications.
Encourage students to ask about any topic they found challenging.
Practice Exam Questions:
Example Questions for Revision:
Sources of Finance:
Explain the advantages and disadvantages of using debt as a source of finance.
Time Value of Money:
Calculate the present value of ₦20,000 to be received in 3 years at an interest rate of 8%.
Investment Decision Tools:
A project costs ₦100,000 and is expected to generate ₦30,000 annually for 5 years. Calculate the Payback Period.
Capital Structure:
If a company’s equity capital is ₦500,000 and its debt capital is ₦200,000, what is its debt-to-equity ratio?
Budgeting:
Prepare a simple operating budget for a small business (choose a business type).
Evaluation (Assessment Questions):
Discuss the difference between equity and debt financing. Which would you recommend for a new startup and why?
How does the time value of money affect investment decisions?
Describe the main differences between operating and capital budgeting.
What are the key objectives of financial management, and how do they influence business decisions?
How would you manage working capital to ensure a business has enough liquidity?
Conclusion:
Well done, everyone!
You’ve made it through a comprehensive course on Financial Management. I hope this week’s review has helped solidify your understanding of the key concepts. Remember, managing finances effectively is crucial in both personal and business contexts. Best of luck with your exams, and feel free to reach out if you have any final questions.