ST235-15 Finance & Financial Reporting

Introductory description

The module considers financial statements, their analysis and interpretation and develops knowledge of corporate finance including how companies raise finance and mange financial risk.

This module is used to determine the exemption eligibility for certain Institute and Faculty of Actuaries (IFoA) business modules. (Independent application to the IFoA may be required for exemption.)

Module web page

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

This module covers the following topics:

1. Corporate governance and company ownership.
2. Preparation of financial statements, including basic principles of corporate taxation.
3. Analysis and interpretation of financial statements.
4. Capital project appraisal.
5. Financial instruments.
6. The cost of capital.
7. Optimal capital structure.
8. Financial institutions and growth of companies.

Learning outcomes

By the end of the module, students should be able to:

• Describe the principles of corporate governance and its role in corporate finance.
• Prepare the statements of profit or loss, financial position and cashflows including consideration of basic principles of personal and corporate taxation.
• Analyse and interpret financial statements, providing appropriate conclusions to different stakeholders.
• Appraise capital projects and recommend an investment decision.
• Describe the structure of a company and the principal forms of financial instruments it uses to raise finance and manage risk.
• Analyse how a company’s cost of capital interacts with the nature of the investment projects it undertakes.
• Analyse the factors considered by a company when deciding on its capital structure and dividend policy.

Indicative reading list

1. Institute and Faculty of Actuaries, Business Finance (CB1), Core Reading, [Online: https://www.actuaries.org.uk/curriculum_entity/curriculum_entity/2]
2. Hillier, D., Ross, S. A., Westerfield, R., Jaffe, J. F., & Jordan, B. D. (2016). Corporate finance. McGraw-Hill Education.
3. Atrill, P., & McLaney, E. J. (2019). Accounting and finance for non-specialists (Eleventh ed.). Pearson.
4. McLaney, E. J. (2014). Business finance: Theory and practice (Tenth ed.). Pearson.
5. Holmes, G. S., Sugden, A., & Gee, P. (2008). Interpreting company reports and accounts (10th ed.). Financial Times Prentice Hall.
6. Dyson, J. R., & Franklin, E. (2020). Accounting for non-accounting students (Tenth ed.). Pearson.

Interdisciplinary

Students learn beyond the boundary of statistics and probability connecting their learning with the professional expectations of the chartered professional body dedicated to educating, developing and regulating actuaries based both in the UK and internationally.

Subject specific skills

Demonstrate facility with mathematical, probabilistic and statistical methods.

Select and apply appropriate mathematical and/or statistical techniques.

Demonstrate knowledge of key mathematical and statistical concepts, both explicitly and by applying them to the solution of finance and financial problems.

Create structured and coherent arguments communicating them in written form.

Reason critically, carefully, and logically and derive judgements to support recommendations.

Transferable skills

Problem solving: Use rational and logical reasoning to deduce appropriate and well-reasoned conclusions. Retain an open mind, optimistic of finding solutions, thinking laterally and creatively to look beyond the obvious. Know how to learn from failure.

Self awareness: Reflect on learning, seeking feedback on and evaluating personal practices, strengths and opportunities for personal growth.

Written Communication: Present arguments, knowledge and ideas, in a range of formats.

Verbal communication: Students will engage with the module leader and peers in dialogue concerning questions from the module.

Professionalism: Prepared to operate autonomously. Aware of how to be efficient and resilient. Manage priorities and time. Self-motivated, setting and achieving goals, prioritising tasks.