Day: March 28, 2021

The role and responsibility of the financial manager Investment appraisal International operations and international investment appraisal The financing decision The dividend decision The weighted average cost of capital (WACC) Risk adjusted WACC and adjusted present value Option pricing An introduction Read More …

The role and responsibility of the financial manager   Influence on objectives   Discuss, and provide examples of, the types of non-financial, ethical and environmental issues that might influence the objectives of companies. Consider the impact of these non-financial, ethical Read More …

        Financial distress and corporate failure   What is corporate failure?   Corporate failure occurs when a company cannot achieve a satisfactory return on capital over the longer term. If unchecked, the situation is likely to lead to an inability Read More …

Introduction to business valuation   This chapter covers several different methods of business valuation. You should view the different methods as complementary which enable you to suggest a possible value region. It is essential that you are able to comment Read More …

Mergers and acquisitions – The terms explained   Terminology   The term ‘merger’ is usually used to describe the joining together of two or more entities.   Strictly, if one entity acquires a majority shareholding in another, the second is Read More …

Introduction   Firms are exposed to interest rate movements in two ways:   The cost of existing borrowings (or the yield on deposits) may be linked to interest rates in the economy. This risk exposure can be eliminated by using Read More …

Introduction   Types of forex risk   Firms may be exposed to three types of foreign exchange risk:   Transaction risk   The risk of an exchange rate changing between the transaction date and the subsequent settlement date on an Read More …

Risk policy formulation   An important part of the financial manager’s role and responsibility is considering how risk is to be managed.   The control and mitigation of risk costs money and takes up management time, so it is critical Read More …

The principles of option pricing theory     Option terminology An option       The right but not an obligation, to buy or sell a particular good at an exercise price, at or before a specified date.     Read More …

Introduction   Alternatives to the use of existing WACC as a discount rate in project appraisal   We have now established that the existing WACC should only be used as a discount rate for a new investment project if the Read More …