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Finance for Decision-making

Key subject details

Subject Finance for Decision-making
Description This subject is primarily for practitioners who have not undertaken formal studies in accounting and/or finance but require the solid foundation in finance principles, information and practice needed as the basis for a career as a company secretary or professional in corporate governance or risk management.
Year of delivery 2024
Award Graduate Certificate and Graduate Diploma of Applied Corporate Governance and Risk Management
Chartered Governance Institute Qualifying Program Chartered Secretary and Chartered Governance Professional
Core/Elective Core
Australian Qualification Framework (AQF) level 8
Subject credit points 10
Total course credit points 40 (Graduate Certificate)
60 (Graduate Diploma)
Pre-requisites None
Assumed knowledge This subject assumes a prerequisite knowledge of basic accounting and finance. Without such skills and knowledge, you may struggle as this subject is at a higher level compared to the basic financial accounting functions covering the debits and credits. If you have not already undertaken a basic financial accounting module through most of the relevant degrees (including law degrees), then you would be advised to do a bridging course prior to studying this subject.
Mode of study Online
Part-time/Full-time Part-time over one semester
Teaching weeks 12
Student workload 164 hours comprising:

  • two (2) time-tabled hours per taught week
  • ten (10) personal study hours per taught week
  • twenty (20) personal study hours for exam preparation
Assessment task (Weighting) Presentation (20%)
Assignment (30%)
Examination (50%)
Key contacts Further information to assist you in your studies at Governance Institute can be requested from: education@governanceinstitute.com.au.

Subject aims

This subject aims to develop your knowledge of finance information and principles and your ability to use that knowledge to interpret financial information in order to provide advice to the board, or a similar decision-making body, in strategy development and/or decision-making.

Subject learning outcomes

  • Understand and interpret financial reports
  • Identify the financial reporting regulatory regimes and their objectives
  • Identify and critically evaluate sources of finance and their associated risks and returns
  • Utilise the major financial models and evaluate these for decision-making
  • Conceptualise the nature and importance of capital structure and the cost of capital and evaluate these for decision-making

Indicative content

The subject is divided into the following 12 modules:

Module 1 — Introduction to financial information and business decision-making

  • Financial information and its role in decision-making
  • The need for regulation in financial reporting
  • Sources of company regulation
  • Australian and international accounting standards
  • The role of the conceptual framework for financial reporting
  • Structure of the conceptual framework
  • Statutory framework and legal requirements
  • Limitations of financial information and reports
  • Contemporary reporting developments

Module 2 — Analysing the assets and liabilities of the organisation — The balance sheet

  • Purpose, content and structure of the balance sheet
  • Definition and recognition of assets
  • Definition and recognition of liabilities
  • Definition and nature of equity
  • Measurements of assets and liabilities
  • Limitations of the balance sheet

Module 3 — Analysing the profit of the organisation — The profit or loss statement

  • Purpose, content and structure of the statement of profit or loss and other comprehensive income
  • Definition, recognition and classification of income
  • Definition, recognition and classification of expenses
  • Alternative financial performance measures
  • Statement of changes in owners’ equity
  • The relationship between the balance sheet, statement of profit or loss and other comprehensive income and statement of changes in equity

Module 4 — Analysing the cash flows of the organisation — The cash flow statement

  • Purpose of the statement of cash flows
  • Format and classification of cash flows in the statement of cash flows
  • Preparing statement of cash flows using direct method and indirect method
  • Interpreting the statement of cash flows
  • Other components and disclosures made in the published financial statements
  • Reporting by groups of companies
  • Requirements and preparation of consolidated financial statements

Module 5 — Analysing business financial performance

  • Why users require financial statements to be analysed
  • Comparative analysis
  • Ratio analysis
  • A typical ratio analysis framework
  • Ratio interrelationships
  • Limitations in using financial statements to assess performance

Module 6 — Analysis and interpretation of financial statements — A case study of ratio analysis

  • Financial statements — A ratio analysis framework

Module 7 — Planning and budgeting systems and performance management

  • Strategic planning and budgeting
  • Influences on the formulation of strategies
  • Determination of corporate strategies
  • The budgeting process
  • Master budget
  • The use of budget in planning and control
  • Behavioural aspects of budgeting
  • Performance measurement

Module 8 — Financial investment principles

  • The goal of financial management
  • Corporate financial management decisions
  • The time value of money
  • The aim of financial mathematics
  • General principles of valuation
  • Investors’ attitudes to risk
  • Measuring historical risk and return
  • Estimating future risk and return
  • Volatility and capital market efficiency
  • Causes of share price variation
  • The principle of diversification — Use of portfolios to reduce risk
  • The concept of beta
  • The CAPM — The relationship between risk and rates of return

Module 9 — Analysing the investment decision (capital budgeting)

  • Investing and the capital budgeting process
  • Project appraisal techniques

Module 10 — Assessing competitive advantage and the investment decision system

  • Investing and strategic planning
  • Competitive advantage and other strategic tools
  • Analysis of projects
  • Common capital budgeting errors
  • Quantitative risk management tools
  • Qualitative risk management tools
  • Evaluating mutually exclusive projects with unequal lives
  • Issues in international capital budgeting

Module 11 — Financing the business — Analysing risks and returns

  • Financing and the financial system
  • The debt/equity financing pattern
  • Short-term or long-term financing?
  • Management of working capital
  • Sources of finance — Debt, equity and hybrids
  • Methods for raising debt, equity or hybrid finance
  • Mechanisms to expedite financing

Module 12 — Assessing capital structures and the cost of finance

  • The capital structure question
  • Factors that determine capital structure in organisations
  • Operating (business) risk and financial risk
  • Capital structure theories — How they help
  • Qualitative factors in determining capital structure
  • Determining the cost of capital
  • Application of the WACC

 Prescribed texts and resources

  • Birt J, Chalmers K, Maloney S, Brooks A, Bond D and Oliver J, 2023, Accounting: Business Reporting for Decision Making, 8th edn, John Wiley & Sons Australia Ltd.
  • Accounting standards