It is a pleasure to welcome you to this Corporate Finance module. Over the next five two-week sessions we will take you through a wide range of corporate finance concepts, explaining how they apply to the principles and practices of financial management in today’s business world.
The aim of the module is to equip learners with the knowledge, skills, and competencies to understand the importance of investment and financing decisions in order to assist their organisation in the creation and capture of value, as well as obtaining sustainable competitive advantage. Students will gain an in-depth understanding of capital structure, including knowledge of practices used by companies to raise finances and manage working capital.
The prime objective of the corporate finance function is to maximise shareholder wealth. The three corporate finance tasks of capital structure, capital budgeting, and working capital management exist to inform and support firms’ decision makers in achieving this objective.
Additionally, a firm must create an effective system of corporate governance to ensure the efficient and productive use of the assets of the company, while minimising the inherent conflicts of interest between shareholders and managers. The agency problem and the conflicts of interest that may arise can represent a serious risk to the overall profitability and ultimate success of a company in achieving its objectives.
This module also aims to provide students with an introduction to risk management, and the tools and practices a company can use to mitigate the various market and operational risks that it will undoubtedly face during its lifetime. The period of relative stability since the global financial crisis should not cause finance managers to become complacent about risk. In fact, it continues to keep corporate treasurers and corporate management firmly focussed on the issues of risk management. The approach to the hedging of financial risk is largely dependent on the magnitude of a company’s potential losses that may result from their exposure to volatile and unfavourable market movements.
Now let’s get into the details and move on to unit 1. Wishing you all the best for this module.