EASTERN ARIZONA COLLEGE Financial Management

Transcription

1 EASTERN ARIZONA COLLEGE Financial Management Course Design Course Information Division Business Course Number SBM 211 Title Financial Management Credits 3 Developed by Mike Fox Lecture/Lab Ratio 3 Lecture/0 Lab Transfer Status ASU NAU UA AGB Dept Elective FIN Departmental Elective Elective Credit Activity Course No CIP Code Assessment Mode Pre/Post Test (25 Questions/50 Points) Semester Taught Fall GE Category None Separate Lab No Awareness Course No Intensive Writing Course No Prerequisites None Educational Value Develops essential skills in decision making for managing the financial aspects of an entrepreneurial organization. It is required for the Small Business Management AAS degree. Description Presents the principles of business financial management, including financial planning, understanding and analyzing financial statements, working capital management, break-even analysis, and raising capital. Emphasis is placed on using financial information for making effective business decisions. Supplies None EASTERN ARIZONA COLLEGE Financial Management

2 Competencies and 1. Understand Financial and Economic Concepts a. Understand the basic concept and importance of finance as it related to individuals and business b. Understand the basic economic concepts of finance. c. Determine the opportunity cost of making decisions. d. Understand the relationship that exists between supply and demand for money and prevailing market interest rates. e. Understand the relationship that exist between risk and return on investment. o learner understands the basic concept and importance of finance as it related to individuals and business o learner understands the basic economic concepts of finance o learner determines the opportunity cost of making decisions o learner understands the relationship that exists between supply and demand for money and prevailing market interest rates o learner understands the relationship that exist between risk and return on investment 2. Apply Concepts of Financial Management and Planning a. Distinguish between strategic plans and functional plans b. Describe the financial goals of a for-profit organization. c. Compare and contrast the basic forms of business ownership (sole proprietorship, partnership, and corporation). d. Apply the basic components of a SWOT analysis. e. Know what basic factors are required to complete a business plan. o learner distinguishes between strategic plans and functional plans o learner describes the financial goals of a for-profit organization o learner compares and contrasts the basic forms of business ownership (sole proprietorship, partnership, and corporation). EASTERN ARIZONA COLLEGE Financial Management

3 o o learner applies the basic components of a SWOT analysis. learner knows what basic factors are required to complete a business plan 3. Understand Financial Statements a. Understanding how financial statements are used by business. b. Understand the differences and similarities that exist between a personal clash flow statement and a business income statement. c. Distinguish between fixed and variable expenses. d. Understand the changes in income statements that exist with different forms of business. e. Analyze the components of the basic accounting equation. f. Distinguish between assets and liabilities g. Understand the relationship between fixed assets and depreciation. h. Understand the significance of the statement of cash flows. i. Given the basic data for a company, construct a financial statement. o learner understands how financial statements are used by business o learner understands the difference and similarities that exist between a personal clash flow statement and a business income statement o learner distinguishes between fixed and variable expenses. o learner understands the changes in income statements that exist with different forms of business o learner analyzes the components of the basic accounting equation o learner distinguishes between assets and liabilities o learner understands the relationship between fixed assets and depreciation o learner understands the significance of the statement of cash flows o learner, given the basic data for a company, constructs a financial statement 4. Analyze Financial Statements a. Understand the purpose of financial statement analysis. b. Perform a vertical analysis of a company s financial statements. c. Perform a horizontal analysis of a company of a company s financial statements. d. Perform ratio analysis of a company and compare those ratios with other companies within the same industry using industry averages. EASTERN ARIZONA COLLEGE Financial Management

4 e. Distinguish among liquidity, activity, leverage, profitability, and market ratios. f. Distinguish between assets and liabilities g. Know how to obtain financial statements and financial information from various sources. o learner understands the purpose of financial statement analysis o learner performs a vertical analysis of a company s financial statements o learner performs a horizontal analysis of a company of a company s financial statements o learner performs ratio analysis of a company and compare those ratios with other companies within the same industry using industry averages o learner distinguishes between liquidity, activity, leverage, profitability, and market ratios o learner distinguishes between assets and liabilities o learner knows how to obtain financial statements and financial information from various sources 5. Perform Profit, Profitability, and Break-Even Analysis a. Understand the relationship of profit margin and asset turnover to the earning power of a company. b. Determine the break-even point and contribution margin. c. Construct and analyze a break-even chart d. Understand the use of leverage and its relationship to profitability and loss. e. Compare and contrast the degree of operating, financial, and combined leverage and their effect on the profitability of a corporation. f. Distinguish among Chapter 11, Chapter 13, and Chapter 7 bankruptcies. o learner understands the relationship of profit margin and asset turnover to the earning power of a company o learner determines the break-even point and contribution margin o learner constructs and analyzes a break-even chart when given the variable costs, revenue, and fixed costs of a business o learner understands the use of leverage and its relationship to profitability and loss o learner compares and contrasts the degree of operating, financial, and combined leverage EASTERN ARIZONA COLLEGE Financial Management

5 o and their effect on the profitability of a corporation learner distinguishes among Chapter 11, Chapter 13, and Chapter 7 bankruptcies 6. Understand Forecasting And Pro Forma Financial Statements a. Understand the importance of a sales forecast to a business. b. Understand the basic steps used in selecting a forecasting model c. Calculate a forecast using time series data. d. Understand the relationships between a business s revenue base, sales forecast, assets, and need for financing. e. Construct pro forma financial statements from available data on a proposed or existing business. f. Apply the percentage of sales method in determining any required new financing needed for a business. o learner understands the importance of a sales forecast to a business o learner understands the basic steps used in selecting a forecasting model o learner calculates a forecast using time series data o learner understands the relationships between a business s revenue base, sales forecast, assets, and needed for financing o learner constructs pro forma financial statements from available data on a proposed or existing business o learner applies the percentage of sales method in determining any required new financing needed for a business 7. Utilize Working Capital Management a. Understand the general concept of working capital management. b. Describe the asset categories that are included in working capital management. c. Determine the methods of managing disbursement and collection of cash to increase business profitability. d. Explain how accounts receivable are analyzed. e. Understand the role that proper inventory management plays in the profitability of a business enterprise. f. Understand how a business s current liabilities are managed. g. Understand the relationship of trade and cash discounts to the minimization of accounts payable. EASTERN ARIZONA COLLEGE Financial Management

6 o learner understands the general concept of working capital management o learner describes the asset categories that are included in working capital management o learner determines the methods of managing disbursement an collection of cash to increase business profitability o learner explains how accounts receivable are analyzed o learner understands the role that proper inventory management plays in the profitability of a business enterprise o learner understands how a business s current liabilities are managed o learner understands the relationship of trade and cash discounts to the minimization of accounts payable 8. Understand the Time Value of Money - Part I: Future And Present Value of Lump Sums a. Explain the relationship between time value of money and inflation. b. Calculate the future value lump sum and present value lump sum factors that are used to solve time-value-of-money problems. c. Calculate the internal rate of return with respect to present value of a lump sum and future value of a lump sum. d. Use financial tables to solve time-value-of-money problems. o learner explains the relationship between time value of money and inflation o learner calculates the future value lump sum and present value lump sum factors that are used to solve time-value-of-money problems o learner calculates the internal rate of return with respect to present value of a lump sum and future value of a lump sum o learner uses financial tables to solve time-value-of-money problems 9. Understand the Time Value of Money - Part II: Annuities a. Explain the differences between an ordinary annuity and an annuity due. EASTERN ARIZONA COLLEGE Financial Management

7 b. Calculate the future value and present value annuity factors that are used to solve time value of money problems. c. Use financial tables to solve time-value-of-money problems. d. Calculate future and present value amounts by solving problems involving annuities and lump sums. o learner explains the differences between an ordinary annuity and an annuity due o o o learner calculates the future value and present value annuity factors that are used to solve time value of money problems learner uses financial tables to solve time-value-of-money problems learner calculates future and present value amounts by solving problems involving annuities and lump sums 10. Perform Capital Budgeting a. Understand the purpose and need for capital budgeting. b. List and explain the steps required in making a capital budgeting decision. c. Distinguish between start-up costs, working capital commitment costs, and tax factor costs and the role each plays in the capital budgeting decision. d. Understand payback, net present value, profitability index, internal rate of return, and accounting rate of return as techniques of capital budgeting. e. Using time value of money, compute the net present value of a capital budgeting project. F Given a company s investment costs, calculate the weighted average cost of capital. o learner understands the purpose and need for capital budgeting o learner lists and explains the steps required in making a capital budgeting decision o learner distinguishes between start-up cost, working capital commitment costs, and tax factor cost and the role each plays in the capital budgeting decision o learner understands payback, net present value, profitability index, internal rate of return, and accounting rate of return as techniques of capital budgeting o learner, using time value of money, computes the net present value of a capital budgeting project o learner, given a company s investment costs, calculates the weighted average cost of EASTERN ARIZONA COLLEGE Financial Management

8 capital 11. Appreciate Personal Financial Concepts as Related to Entrepreneurial Finance a. Understand the overall nature of risk as it pertains to both individuals and businesses. b. Identify the programs employed by individuals and business in managing risk. c. Understand the role of capital accumulation in achieving financial success. d. Understand the importance that estate planning plays for the individual and business owner in the transfer of wealth. o learner understands the overall nature of risk as it pertains to both individuals and businesses o learner identifies the program employed by individuals and business in managing risk o learner understands the role of capital accumulation in achieving financial success o learner understands the importance that estate planning plays for the individual and business owner in the transfer of wealth Types of Instruction Classroom Presentation Grading Information Grading Rationale One-hour tests and final exam (4 50 points = 200 points) - 40% Hands-on activities (10 10 points each = 100 points) - 25% In-class case studies (2 50 points each = 100 points) - 25% Post-test (50 points) - 10% Total possible - 100% Grading Scale A % B 80-89% C 70-79% D 60-69% F Below 60% EASTERN ARIZONA COLLEGE Financial Management