Vital Statistics 2nd Ed.

Financial Strategy

Publisher: The Open University, 1999, 185 pages

ISBN: SUP47233-5

Keywords: Statistics, Finance, MBA

Synopsis

The aim of this course is to introduce students to accounting and finance problems which face organsations at board level and to enable them to feel at ease working with finance and accounting experts as and when necessary.

By the end of this course, students will have a grasp of the fundamentals of financial analysis and corporate financial theory and will know how to tackle the main financial problems they are likely to encounter in the work environment. The financial issues discussed will be those relevant in the private and public sectors and will also be relevant in a global context.

Financial Strategy covers financial statement analysis, the cost of capital, project appraisal, company valuation, foreign exchange and interest rate markets, management and investor performance measures.

On completing this course, managers should be able to:

• appreciate the financial strategy issues affecting organisations
• understand the relevance of finance and accounting both within the organisation and to stakeholders in organisations
• undertake a financial analysis of an organisation and be able to interpret the results in the context of lending and investing decisions
• make investment decisions, both for projects and companies
• be aware of the financing choices available to organisations and how financial structure should be determined
• assess the financial risks facing organisations, in particular credit, interest and foreign exchange risk, and adopt risk hedging strategies which suit the risk profile of the organisation concerned
• understand how organisations measure financial performance internally and how their financial performance is assessed by stakeholders in a global context

• Introduction: a guide to Vital Statistics
• Part 1 Knowledge
1. The Basic Rules of Calculation
• 1.1 Introduction
• 1.2 Operations with Numbers
• 1.2.1 Use of Brackets
• 1.2.2 Use of Memory
• 1.2.3 Rounding
• 1.2.4 Fractions
• 1.2.5 Reciprocals
• 1.2.6 Ratios
• 1.2.7 Percentages
• 1.3 Probability
• 1.3.1 Combined Events
• 1.3.2 Tree Diagrams
• 1.4 More Difficult Numbers
• 1.4.1 Negative Numbers
• 1.4.2 Indices: Numbers and Powers
• 1.4.3 Exponential Form
2. Algebra, Graphs and Calculus
• 2.1 Introduction
• 2.2 Basic Algebra
• 2.2.1 Simplifying Equations
• 2.2.2 Solving Equations
• 2.2.3 Equations with Two Unknowns
• 2.2.4 Use of Logarithms
• 2.2.5 Natural Logarithms
• 2.3 Graphs
• 2.3.1 Plotting Straight-Line Equations
• 2.3.2 Characteristics of Straight Lines
• 2.3.3 Determining the Equation from the Graph
• 2.4 Calculus
• 2.4.1 First Order Derivatives
• 2.4.2 Second and Higher Order Derivatives
• 2.4.3 Partial Differentiation
3. Statistical Techniques
• 3.1 Introduction
• 3.2 Averaging
• 3.2.1 The Arithmetic Mean
• 3.2.2 The Mode
• 3.2.3 The Median
• 3.2.4 Using Excel to Calculate Averages
• 3.2.5 Averaging from Frequency Distributions
• 3.2.6 Geometric Mean
• 3.2.7 Weighted Average
• 3.3.1 Range
• 3.3.2 Standard Deviation
• 3.3.3 Normal Distribution
• 3.4 Sampling
• 3.4.1 Confidence Intervals
• 3.4.2 The Student’s t Distribution
• 3.4.3 Degrees of Freedom
• 3.5 Analysing Relationships Between Data
• 3.5.1 Correlation and Covariance
• 3.5.2 Regression Analysis
• 3.5.3 Line of Best Fit
• 3.5.4 Linear Regression Analysis
• 3.6 Time Series Analysis
• 3.6.1 Seasonal Variation
• 3.6.2 Basic Trend
• Part 2 Application to Financial Techniques
• Introduction
1. Investment Appraisal
• 4.1 Introduction
• 4.2 Time Value of Money
• 4.2.1 Compounding and Discounting
• 4.2.2 Annuities and Geometric Progressions
• 4.2.3 Perpetuities
• 4.2.4 Annualised Rates of Return and Continuous Discounting
• 4.3 Investment Appraisal
• 4.3.1 Net Present Value
• 4.3.2 Internal Rate of Return
• Scale of projects
• Competing projects
• Changing cash flows
• Reinvestment assumption
• 4.3.3 Payback Period
• 4.3.4 Return on Capital Employed (ROCE)
• 4.4 Further Issues in the Use of Net Present Value
• 4.4.1 Relevant Costs and Revenues
• 4.4.2 Adjustment to Reflect Inflation
• 4.4.3 Taxation
• 4.4.4 Profitability Index
2. Cost of Finance
• 5.1 Introduction
• 5.2 Portfolio Theory and the Capital Asset Pricing Model
• 5.2.1 Portfolio Theory
• 5.2.2 Derivations of the Portfolio Equations
• 5.2.3 Minimisation of Portfolio Risk
• 5.2.4 Multi-Asset Portfolios
• 5.2.5 Derivation of the CAPM
• 5.3 Dividend Valuation Model
• 5.3.1 Constant Growth Dividends: The Gordon Growth Model
• 5.4 Bonds
• 5.4.1 Bond Yields
• 5.4.2 Duration of Bonds
• 5.4.3 Convexity of Bonds
• 5.5 The Weighted Average Cost of Capital
• 5.6 Foreign Exchange
• 5.6.1 Buying and Selling Rates
• 5.6.2 Cross Rates
• 5.6.3 Forward Exchange Rates
• 5.6.4 The Four-Way Equivalence Model
• The Fisher effect
• Interest rate parity theory
• 5.7 Financial Options
• 5.7.1 Black-Scholes Model
• 5.7.2 Binomal Model
• 5.7.3 Put-Call Parity
• Appendix A Discount Table
• Appendix B Normal Distribution Table

Reviews

Vital Statistics

Opinion

MBA material, what do you expect?

New Comment

required

required (not published)

optional

required required