CFS. Syllabus. Certified Finance Specialist. International benchmark in Finance profession

Transcription

1 CFS Certified Finance Specialist Syllabus International benchmark in Finance profession

2 Certified Finance Specialist Summary: This award will provide candidates the opportunity to gain advanced level knowledge of Financial Management. The syllabus include the nature and scope of financial strategy, capital investment, DCF methods of investment appraisal, project appraisal, sources of finance, financing options, the cost of capital, capital markets, stock-market efficiency, working capital management, currency risk, interest rate risk, futures, options, forward rate agreements, swaps, Islamic finance, optimal capital structure and dividend policy. Summary of learning outcomes Summary of the content for each learning outcome Assessment criteria for each learning outcome 1 Explore the nature and scope of financial strategy Financial management & financial strategy, financial objectives of private sector companies, typical stakeholders in a company, non-financial objectives, and objectives of not-for-profit organisations and role of the finance function in financial strategy. Identify the relevant component/ concept of finance in the light of organisational objectives 2 Explore the capital investment process & tools Investment decisions, steps in project appraisal, methods of project appraisal, non-financial factors in a capital investment decision, the accounting rate of return (ARR) method, the payback method and the payback & ARR methods in practice. Apply relevant methods / concepts in capital investment under simulated scenarios 3 Understand DCF methods of investment appraisal Investment appraisal & cash flows, time value of money, discounted cash flow, net present value method of project appraisal, discounted payback, internal rate of return method of project appraisal, NPV & IRR comparison, the NPV method & shareholder wealth creation, asset replacement decisions, multiple methods of investment appraisal and allowing for inflation & taxation. Apply relevant DCF methods / concepts for investment appraisal

3 4 Explore sensitivity analysis Definition & sources of risk & uncertainty, uncertainty & sensitivity analysis, risk Utilise relevant analysis for & capital rationing for & scenario analysis, causes of a shortage of capital, single period capital risk / rationing for project appraisal rationing and profitability index. investment 5 Explore share capital as The need for finance, ordinary shares (equity), obtaining a listing, offer for sale Identify underlying concepts source of finance & offer for subscription, placing, intermediaries offer, stock market, new issues in share capital as source of of shares by quoted companies, rights issue, the timing of new equity issues, finance other methods of issuing shares, scrip dividends, scrip issues, stock splits, repurchase of shares and preference shares. 6 Explore alternative sources Long-term and short-term finance, loan stock or bonds, the market value of Identify alternative sources of finance bonds, types of bonds, convertibles, bonds with share warrants attached, bank of finance finance, leasing & hire purchase, invoice discounting, debt factoring, bills of exchange, bankers' acceptance (BA) credit facility, PFI/PPP, finance & the small business, fixed versus floating rate of interest, internally-generated funds and Islamic finance. 7 Explore financing options Capital structure & sources of finance, using the financial forecasts, financial Identify relevant tools and/ available ratios for assessing capital structure, the effect of gearing on earnings, factors concepts to take appropriate influencing the choice of financing methods, short-term financing & capital financing decision structure, working capital ratios, funding the investment in current assets and overtrading. 8 Explore the costs of capital Definition of cost of capital, the cost of equity capital, the cost of debt capital, the cost of preference share capital, the weighted average cost of capital (WACC), the NPV of new projects & shareholder wealth, the capital asset pricing Apply relevant tools and/ concepts to identify cost of capital (issues)

4 model (CAPM), evaluation of the use of debt / equity, dividend valuation models, estimating a beta factor and ungeared & geared betas. 9 Explore the components of The nature & purpose of stock exchanges, stock exchanges & stock markets, Identify relevant concepts of capital markets secondary market, obtaining a listing, international capital markets, stock capital markets market ratios, venture capital, share prices & market efficiency, different forms of efficiency (weak form, semi-strong form, strong form efficiency) and the efficient market hypothesis & its implications. 10 Understand the working The nature & scope of working capital management, working capital ratios, Apply relevant concepts in capital management issues working capital needs of different businesses, working capital & cash flow, working capital management working capital requirement, management of receivables, assessing creditworthiness, debt collection policies & procedures, inventory management, bulk purchase discounts, management of cash, potential cash flow problems, monthly statements of cash flows & forecasts, banking procedures & cash management, managing a bank overdraft, investing surplus cash and taking early settlement discounts. 11 Understand currency risk & Risk & foreign exchange, buying & selling currency, managing transaction Identify relevant concepts in interest rate risk exposures, forward exchange contracts, quoting a forward rate (premiums & currency / interest rate risk discounts), implications of using forward contracts to hedge, money market hedge, translation exposure, variable rate & fixed rate borrowing, money market transactions, default risk, interest rate changes and interest rate exposures.

5 12 Understand futures, options, FRA & SWAPS Derivatives, characteristics of futures, closing a position, definitions & terminology, margin & the central counterparty, currency futures, basis risk & hedge efficiency, choosing between forward contracts & currency futures, characteristics of options, exercising an option, option premium, currency options, interest rate options, profits / losses on option positions, options trading strategies, purpose of FRA, using FRA to hedge interest rate risk, FRA prices & the compensation payment, the nature of swaps, interest rate swaps, using interest rate swaps and currency swaps. Apply underlying concepts and / tools in derivatives 13 Explore optimal capital Enterprise value & the WACC, traditional & net operating income views of WACC, Apply relevant tool(s) to find structure traditional view of WACC, net operating income view of WACC (MM theory), optimal capital structure Modigliani-Miller theory adjusted for taxation and factors affecting capital structure. 14 Explore dividend policy Dividends as return to shareholders, retentions & dividend growth, the effect of income tax, theories of dividend policy, dividend policy in practice, scrip dividends and share repurchase. Identify correct concepts in relation to dividend