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MODULE TITLE: Financial Decision Making (b)

    MODULE CODE: ACF731

    YEAR OF REVISION: 2009/10

    MODULE LEVEL: M

    CREDIT POINTS: 10

    MODULE STATUS: Compulsory

    SEMESTER: 1

    LOCATION: Jordanstown

    E-LEARNING: Web supplemented

    PREREQUISITE(S): None

    CO-REQUISITE(S): None

    MODULE CO-ORDINATOR(S): Ballantine, J. Professor

    TEACHING STAFF RESPONSIBLE

    FOR MODULE DELIVERY: Ballantine, J. Professor

HOURS: Lectures 24 hrs

     Independent study (including

     assessment) 76 hrs TOTAL EFFORT HOURS: 100 hrs

    ACADEMIC SUBJECT: ACF

RATIONALE

    Financial decisions and their implications need to be considered by all organisations. The accounting function cannot be viewed in isolation from the other key functional areas of management. Therefore, it is important that managers understand financial decision making at both an operational and strategic level.

AIMS

    This module is designed for managers with little or no previous knowledge of accounting and financial decision making. It will introduce these two important subject areas and will take a practical "general manager" based approach rather than attempt to train students to be accountants. The module will provide students with an understanding of the key issues and techniques used in financial decision making with particular emphasis placed on understanding and interpreting financial data. As a result, students should be better equipped to

    enter into intelligent discussion with accountants and general managers within their organisations.

LEARNING OUTCOMES

    A successful student will be able to:

    KNOWLEDGE AND UNDERSTANDING

    K1 Demonstrate knowledge of the effect decisions, transactions and events

    have on the financial performance and position of a business. K2 Understand the role of financial techniques as an aid to management

    decision making and control.

    K3 Demonstrate an understanding of the techniques of financial appraisal and

     their interpretation.

    K4 Demonstrate knowledge of the impact of accounting on other functional

    areas of the business.

    K5 Comment authoritatively on how financial decision making can be used to

     improve organisational success.

INTELLECTUAL QUALITIES

    I1 Identify, analyse and synthesise materials from primary and secondary

     sources that assist in an understanding of accounting.

    I2 Identify the financial information relevant to different business problems. I3 Interpret financial statements intelligently and understand their limitations. I4 Integrate knowledge of accounting to past experience and apply it to new

     situations.

    I5 Think critically and creatively and to provide reasoned and rigorous

    analyses.

    I6 Challenge preconceptions and remove functional boundaries to deal with

     complex situations holistically.

PROFESSIONAL/PRACTICAL SKILLS

    P1 Apply knowledge of financial decision making to problem solving situations. P2 Make decisions in complex and unpredictable situations.

    P3 Perform effectively as a member of a team.

    P4 Communicate with accountants and non-accountants in a way that

     demonstrates a broader understanding of financial issues and techniques. P5 Recognise and utilise own and others contributions within group

    processes.

    P6 Complete a written assignment in a way that demonstrates systematic

     information gathering, accuracy and critical reflection.

TRANSFERABLE SKILLS

    T1 Demonstrate competence in written and oral communication.

    T2 Understand and demonstrate personal effectiveness in classroom

     contributions, assignments and examinations.

    T3 Demonstrate an ability to deal with complex issues systematically and

     creatively.

    T4 Demonstrate an ability to take responsibility for development of knowledge

     and skills.

    T5 Demonstrate an ability to learn through critical reflection. T6 Demonstrate an ability to learn and reflect in order to enhance personal

     effectiveness through feedback from tutor and peers.

CONTENT

    Introduction to Course and the nature of Financial Decision Making Course objectives, content, assessments and schedule. Introduction to financial decision making as a study area. The importance of financial success will be looked at in the context of a range of stakeholders, both internal and external, and the strategy of an organisation. The way in which businesses are organised, structured and managed, and the functioning of the accounting function within organisations will also be discussed.

Measuring and reporting financial position

    The purpose of the balance sheet; the conventions underpinning the balance sheet; sources of funding and the limitations of the balance sheet will be considered.

Measuring and reporting financial performance

    The nature and purpose of the income statement; the major recognition and measurement issues to be considered when preparing an income statement; the accounting conventions underpinning the income statement and differences in cash and profit will be considered.

    Accounting for Limited Companies, Accounting policy choice and Cash flow reporting

    The nature of limited companies; the responsibilities of company directors and auditors; the main sources and need for accounting regulation; creative accounting; the importance of cash flow within a business and the main features and interpretation of cash flow statements.

Financial analysis

    The purposes of financial (ratio) analysis; major categories of ratios; the interpretation of ratios within the context of the business and its environment; working capital management and the limitations of financial analysis.

Cost Behaviour/ Cost-Volume Profit Analysis

    Understand the concept of relevant costs within a business context; appreciate how cost behave and their relevance to management decisions; understand and apply the concept of relevant costs; apply the concept of cost-volume-profit

    analysis to business decisions; appreciate the weaknesses of cost-volume-profit analysis.

Performance Management

    Understand the importance of performance measurement within organisations; appreciate the difficulties associated with traditional financial performance measurement; appreciate the multi-dimensional nature of performance measurement.

    Introduction to Budgeting and the Capital investment appraisal process Gain an appreciation of the strategic planning and budgeting process within organisations; appreciate the importance of long-term investment appraisal; understand how to apply a number of investment appraisal methods used in practice; appreciate the strengths and weaknesses of various techniques of investment appraisal.

TEACHING AND LEARNING METHODS

    This module will examine a range of theoretical and practical issues related to financial decision making within organisations. The module is designed for managers with little or no previous knowledge of accounting and financial decision making.

    As the module is designed for students who are committed to developing their financial decision making skills, practical application of the techniques and interpretation of their results will be particularly emphasised. During the scheduled two hour lecture slot, time will be built in for reflection which will allow the group to view videos, analyse case studies and consider pertinent issues in small group scenarios. In addition, lectures will be highly interactive in nature and students will be required to make small group presentations on certain key issues.

    The module is web supplemented and will be supported via on-line resources in two ways: first, through the use of WebCT which will provide the students with access to relevant academic journal articles, professional publications, lecture notes and answers to materials set; secondly, through the use of a companion website which is an integral aspect of the required textbook. The companion website provides a range of supporting materials for students including additional exercises and review questions, links to relevant web sites and an on-line testing bank which provides on-line summative feedback to students. Students will be expected to engage in independent study, both as individuals and groups, in order to reinforce their understanding of the materials covered.

ASSESSMENT

    50% Coursework 50% Examination

    The assessment element of the module will require students to work in groups to conduct a financial analysis of a listed company using the CORE analysis as outlined in Moon and Bates (Management Accounting Research, 1993). Groups will be required to submit their answer in report format. As part of the group learning process, individual learning logs must be completed by each group member. Individual contribution to the group assessment will be assessed by reviewing individual learning logs. To that end, marks of up to 20% of the total coursework marks will be awarded for this aspect of the group assignment. The remaining 80% will be awarded to members on the basis of the group project. The examination in this module will be based on a two hour examination paper. Section A will be compulsory and will consist of one financial analysis question plus a multiple choice question consisting of 20 parts. Section B will consist of two questions which will contain both numerical and discussion type questions. Students will be expected to answer one question from Section B.

READING LIST

    Required

    thMc Laney, E., & Antrill, P. (2008) Accounting: An Introduction, 4 Edition, FT

    Prentice Hall.

Recommended

     thAntrill, P., & Mc Laney E. (2008) Accounting and Finance for Non-Specialists, 6

    Edition, FT Prentice Hall. thDyson, J. (2007) Accounting for Non-Accounting Students. Pitman 7 Edition

    Vaitilingham, R. (2005) The Financial Times Guide to Using the Financial Pages 5th Edition

Academic Articles

Drury, C. and Tayles, M. (1997), “The misapplication of capital investment

    appraisal techniques”, Management Decision, Vol 35, No 2, pp. 86-93.

    Kaplan R.S. and Norton, D. P. (1992). 'The Balanced Scorecard - Measures that Drive Performance”, Harvard Business Review, January-February, pp. 71-79.

    Kaplan R. S. and Norton, D. P. (1993). 'Putting the Balanced Scorecard to Work', Harvard Business Review, September-October, pp. 134-147.

    Kaplan, R. S. and Norton, D. P. (1996), „Using the Balanced Scorecard as a

    Strategic Management System‟, Harvard Business Review, Jan-Feb, pp. 75-85.

    Kaplan R. S. and Norton D. P. (2001a). “Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part I”, Accounting

    Horizons, Vol.15, No.1, March, pp.87-104.

    Kaplan R. S. and Norton D. P. (2001b). “Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part II”, Accounting

    Horizons, Vol.15, No.2, June, pp.147-160.

    Mackay, A. (2005), “A Practitioners‟ Guide to the Balanced Scorecard, A Practitioners‟ Report Based on: „Shareholder and Stakeholder Approaches to Strategic Performance Measurement Using the Balanced Scorecard”, CIMA,

    London UK.

    Moon, P. and Bates, K. (1993), “Core analysis in strategic performance

    appraisal”, Management Accounting Research, Vol 4, pp.139-152.

    Murby, L. and Gould, S. (2005) Effective Performance Management with the Balanced Scorecard Technical Report, CIMA, London UK.

    Norreklit, H. (2000) „The balance on the balanced scorecard a critical analysis

    of its assumptions‟, Management Accounting Research, Vol 11, pp. 65-88.

    Nørreklit, H. (2003) “The Balanced Scorecard: what is the score? A rhetorical analysis of the Balanced Scorecard”, Accounting, Organizations and Society, Vol

    28, pp. 591619.

Useful Websites

    IAS Plus provides summaries of all International Accounting Standards http://www.iasplus.com/standard/standard.htm

    UK Accounting Standards Board

    http://www.frc.org.uk/asb/technical/standards.cfm

SUMMARY DESCRIPTION

    Financial decisions and their implications need to be considered by all organisations. This module will examine a range of theoretical and practical issues surrounding financial decision making. This module is designed for managers with little or no previous knowledge of accounting and financial decision making. It will take a practical "general manager" based approach rather than attempt to train students as accountants. The module will provide students with an understanding of the key issues and techniques used in financial decision making with particular emphasis placed on understanding and interpreting financial data. As a result, students should be better equipped to enter into intelligent discussion with accountants and general managers within their organisations.

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