H11FM
Financial Decision
Making Syllabus
Course Aim
The Financial Decision Making course aims to provide
students with a set of accounting and financial tools that
enables them to interpret and critique financial
information from a variety of sources and to make
informed and effective financial decisions that directly
impact company operations.
Edinburgh Business
Edinburgh Business School
School // H11FM
H11DP
H11LT Leadership
Delivering Successful
Theory and
Financial Decision Projects
Practce
Management 2
Contents
Course Synopsis 4
Course Structure 5
Module 1: The Financial Landscape 5-6
Module 2: Financial Accounting 6
Module 3: Working Capital Management 6-7
Module 4: Management Accounting 7
Module 5: Budgeting 7
Module 6: Financial Tools 8
Module 7:Capital Budgeting and Investment Appraisal 8
Module 7: Financing, Payout Policy and Management 8-9
Assessment 9
Edinburgh
Edinburgh Business
Business School
School // H11LT
H11FMLeadership Theory and
Financial Decision Practce
Management 3
Course Synopsis
The course provides a practical approach to the crucial accounting and finance issues that affect
organisations in today’s business environment. First, to contextualise, the course describes ‘the financial
landscape’. The course then examines the application of financial and management accounting ‘tools’
relevant to critical financial decisions, including key performance indicators, breakeven analysis, working
capital management techniques and the budgeting process. This is followed by a consideration of financial
management and the decisions faced by organisations on investment (what projects), finance (what type
of finance) and dividend (pay or retain) and how an organisation analyses and takes action on each of
those decisions. The course concludes with an introduction to exchange rate and interest rate risk
management.
Course Learning Outcomes
On completion of this course students will be able to:
Develop an applied understanding of finance and accounting concepts relevant to general
management roles.
Critically analyse external financial statements and make informed decisions through the identification
and application of appropriate KPIs
Evaluate management accounting decision-making techniques and apply them in relevant internal and
external situations
Develop a critical awareness of the time value of money, risk, future returns and the capital
investment decision
Engage effectively in management discussions on finance and accounting issues
Make informed, reasoned and sustainable decisions on capital investment programmes
Critically analyse and propose reasoned solutions to questions of capital allocation, retention and
distribution
Edinburgh
Edinburgh Business
Business School
School // H11LT
H11FMLeadership Theory and
Financial Decision Practce
Management 4
Course Structure
The course is broken down into 8 learning modules as follows:
Module 1: The Financial Landscape
The aim of this module is to introduce students to the key features of financial accounting, management
accounting and financial management and how these three aspects inter-link within the stakeholder,
economic and financial markets background within which they function
At the end of this module students will be able to:
appreciate the financial landscape and how it impacts on finance, accounting and financial
management
identify key stakeholders in an organisation and its financial objectives
critically analyse the checks and balances on corporate financial activity including the role of the board
of directors and the audit process
Topics covered are as follows.
How a business works
Overview of financial accounting, management accounting and financial management
Profit versus cash
Economic environment
Financial markets
Stakeholders
Checks and balances on corporate financial activity
Accounting, finance and ethics
Module 2: Financial Accounting
The aim of this module is to equip students with the critical knowledge to be able to critically analyse and
interpret external corporate financial statements
At the end of this module students will be able to:
understand and analyse an organisation's income statement, statement of financial position and
historic cash flow statement and provide comment on the organisation’s performance, its assets and
liabilities and its cash position
compile and interpret a cash flow statement using the information provided by the income statement
and statement of financial position
Calculate a range of relevant ratios from a company's financial statements, interpret and analyse them
and provide a meaningful commentary on the financial performance of a business, using the calculated
ratios to illustrate it
Topics covered are as follows:
Recording transactions
Edinburgh
Edinburgh Business
Business School
School // H11DP
H11FM Delivering Successful
Financial Decision Projects
Management 5
Building a set of financial statements
Reporting performance
Reporting financial position
Reporting cash flows
Subjective issues in financial statements
Interpreting financial performance and position
Module 3: Working Capital Management
The aim of this module is to enable students to identify, analyse and critically assess an organisation’s
management of the key components and elements of working capital
At the end of this module students will be able to:
Identify the particular components of working capital in any given scenario
Apply and evaluate a variety of techniques used to manage the different components of working
capital
Determine, analyse and interpret the adequacy of working capital elements at different levels of
business activity
Critically evaluate how an organisation finances its working capital requirement
Topics covered are as follows:
Working capital overview and definitions
Inventory management
Receivables management
Payables management
Cash management
Working capital funding strategies
Module 4: Management Accounting
The aim of this module is to equip students with a critical knowledge and understanding of key
management accounting techniques and how to select and apply these in making informed decisions in
both internal end external business scenarios.
At the end of this module students will be able to:
Explain and apply relevant costing principles in a decision-making scenario
Calculate and evaluate the breakeven position for an organisation
Identify scare resources and apply limiting factor analysis in a given scenario
Apply appropriate methods of overhead allocation
Develop a critical understanding and application of target and life-cycle costing techniques
Topics covered are as follows:
Relevant costs for decision making
Edinburgh
Edinburgh Business
Business School
School // H11LT
H11FMLeadership Theory and
Financial Decision Practce
Management 6
Cost-volume-profit (CVP) and breakeven analysis
Cost management and allocating overheads
Life-cycle costing
Target costing
Module 5: Budgeting
The aim of this module is to equip students with an understanding of the budgeting process and the
preparation and use of profit and cash forecasts to make critical business decisions and introduces various
means of measuring performance
At the end of this module students will be able to:
Evaluate appropriate budgeting systems in a given scenario
Apply critical quantitative techniques, such as learning curves, in the budget process
Identify the critical numeric components of a budget and how to compile these into profit budget and
cash budgets
Develop a critical understanding of the budget control process and calculate appropriate variances
between budgeted and actual results
Topics covered are as follows:
Types of budgeting systems
Quantitative forecasting techniques
Budget compilation
The control process
‘Beyond budgeting’
Module 6: Financial Tools
The aim of this module is to equip students with a thorough understanding of the fundamental financial
tools and valuation techniques required in the capital investment appraisal process
At the end of this module students will be able to:
Calculate, analyse and interpret the basic financial appraisal techniques of accounting rate of return
and payback period
Understand and apply discounting techniques in a financial appraisal scenario
Calculate the cost of equity, the cost of debt and the weighted average cost of capital and apply these
in a financial appraisal scenario
Topics covered are as follows:
Basic financial appraisal techniques
Use of discounting techniques
Required rate of return and cost of capital
Module 7: Capital Budgeting and Investment Appraisal
Edinburgh
Edinburgh Business
Business School
School // H11DP
H11FM Delivering Successful
Financial Decision Projects
Management 7
The aim of this module is to provide students with a critical knowledge of the capital budgeting process in
order to allow them to make informed, reasoned and sustainable capital investment decisions
At the end of this module students will be able to:
Demonstrate a critical understanding of the long-term investment appraisal process
Identify, calculate and apply the relevant cash flows and cost of capital in an investment appraisal
scenario
Develop a critical understanding of the impacts of taxation, inflation and working capital on the cash
flows used in capital investment appraisal
Identify and apply appropriate risk and uncertainty measures in the investment appraisal process
Topics covered are as follows:
The capital investment appraisal process
Estimating the numbers required
Risk and uncertainty
Module 8: Financing, Payout Policy and Risk Management
The aim of this module is to provide students with the key knowledge and understanding of capital
structure, dividend policy and currency/interest rate risks to enable them to propose reasoned solutions to
questions on capital financing, payout decisions and basic risk management.
At the end of this module, students will be able to:
Identify and discuss short term and long term types of finance
Develop a critical understanding of the capital structure decision in a commercial organisation
Assess the impact of both debt and equity finance in a given scenario
Discuss how a company determines it dividend policy and demonstrate a critical understanding of the
practical influences on the dividend decision
Assess the exchange rate risks and interest rate risks faced by a commercial organisation
Identify, apply and evaluate basic methods of foreign currency risk management and interest rate risk
management
Topics covered are as follows:
Types of finance
Capital structure
Dividend policy
Risk management
Assessment
The course is assessed by final examination, accounting for 100% of the overall mark.
There is no choice in the selection of questions to be answered. The paper is in three sections:
Edinburgh
Edinburgh Business
Business School
School // H11LT
H11FMLeadership Theory and
Financial Decision Practce
Management 8
Section Exam %
I 20 multiple choice questions worth two marks each 40
II One mini-scenario with 5 questions worth 2 marks each 10
III Two scenario based case studies, mix of numeric and 50
narrative assessment, worth 50 marks in total (either
25+25 or 20+30)
TOTAL 100
Edinburgh
Edinburgh Business
Business School
School // H11DP
H11FM Delivering Successful
Financial Decision Projects
Management 9
