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CA3.6 – Advanced Financial Management

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CA3.6 - Advanced Financial Management

Course Features

Course Details

CA3.6-Advanced Financial Management

On completion of this module, candidates will reach a competency sufficient to be able to:
  • Formulate financial strategies
  • Evaluate investment opportunities
  • Recommend appropriate financial risk strategies
  • Evaluate global financial markets and the role of multinational businesses
Syllabus topics  Weighting (%) LO
Financial strategies 20 1 and 2
Investments 35 3
Financial risk strategies 35 4 and 5
Global financial markets and the role of multinational businesses 10 6

Learning outcomes

  • LO1: Evaluate the issues involved in the formulation of an organisation’s financial strategies
  • LO2: Evaluate the various financing options available to an organisation and recommend the most appropriate strategy based on the organisation’s objectives
  • LO3: Evaluate the various types of investment opportunities that may be available to an organisation, using appropriate techniques and considering the major issues that may arise
  •  LO4: Assess the role of the treasury management function within an organisation
  • LO5: Evaluate the extent to which an organisation is exposed to foreign exchange and interest rate risks and recommend appropriate strategies to manage these risks
  • LO6: Evaluate the impact of, and how to manage, global issues, including the management of international trade and the development of strategic financial plans
  1.  Financial strategies: LO1, 2
    1. Determine and explain financial strategy objectives, including the role of Islamic finance, taking account of the constraints on various elements of financial strategy
    2. Evaluate the available financing options, including:
      1. Short, medium and long term alternatives
      2. Issues of new capital
      3. Gearing and capital structure
      4. Dividend policy
      5. Working capital management
    3. Explain stakeholder interests and their effect on financial strategy formulation and propose resolutions to stakeholder conflicts
    4. Identify ethical problems in financial strategy and propose appropriate resolutions
    5. Evaluate financial strategies in terms of the financial and strategic objectives of the organisation
    6. Forecast financing requirements for both short and long term financing requirements
    7. Evaluate alternative methods of financing, incorporating the impact of the tax, and select an appropriate financial plan
    8. Prepare a financial plan and evaluate the impact of uncertainty on the plan
  2. Investments: LO3
    1. Evaluate investment proposals in terms of value added for shareholders of a project using discounted cash flow techniques, taking account of taxation and inflation
    2. Evaluate the role and impact of risk in investment appraisal
    3. Evaluate cost of capital techniques including the cost of equity, debt, preference shares, bank finance, the weighted average cost of capital, convertibles and public sector discount rates
    4. Calculate bond prices and cost of debt using net present values
    5.  Recommend an investment decision taking account of non-financial factors such as corporate social responsibility, sustainability, and ethical practice
    6. Prepare business valuations for mergers, acquisitions, management buyouts and business divestments and recommend an appropriate decision, paying particular attention to the following valuation techniques:
      1. Dividend yield based valuation techniques
      2. Price earnings ratio based valuation techniques
      3. Discounted cash flow based valuation techniques
      4. Asset based and net asset based measures of value
      5. Value based management
      6. Shareholder value analysis
      7. Short and long term growth rates and terminal values
      8. Economic profit methods
      9. Cash flow return on investment
      10.  Total shareholder return
      11.  Market value added
    7. Explain the limitations of investment appraisal analysis for a given business scenario
  3. Financial risk strategies: LO4, 5
    1. Explain the role of treasury function
    2. Explain the role of money markets
    3. Explain the financial risks of a business based on a given scenario, data and information
    4. Explain how financial instruments such as hedging and derivative products may be used to manage risks and explain the nature of such products
    5. Evaluate the alternative approaches to managing interest rate exposure based on a given scenario, data and information, calculating the costs of different hedging arrangements
    6. Evaluate the alternative approaches to managing currency rate exposure based on a given scenario, data and information calculating the costs of different hedging arrangements
  4. Global issues and the multinational company: LO6
    1. Describe the emerging issues in the global financial markets
    2. Describe developments in international trade and finance
    3. Explain the key elements of the management of international trade and finance
    4. Evaluate the impact of different circumstances underpinning the development of strategic financial plans for multinationals.
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