INTRODUCTION TO FINANCIAL MANAGEMENT

GRADING SCHEME
Class participation 30%
Class assignments 30%
Exam 40%
CLASS NOTES
His expectations:
o Show maturity
o Think. Apply oneself
Objective of a manager: To manage resources in the context of
ones own business or another company in such a way that
will help one maximize value and create wealth
A manager is paid to make decisions. There must be rigor in
taking decisions and an understanding of the consequences of
ones decisions. Can one contemplate all relevant factors
required to take a good decision? No decision in business is a
stand-alone business. Every resource allocation decision one
takes as a manager has an impact on every aspect of the
business. One needs to be able to drill down to the functional
areas without thinking in silos.
This is a self-directed learning programme. One needs to do
the bulk of the work oneself. The facilitator will provide the
class with a framework that will guide learning.
Ultimately, quality of learning is determined by:
o Depth of the class discussions, which is determined by
the quality of individual experiences and ability to share
learning
o Contributions - what you put on the table. Make
contributions that give insights to colleagues and move
the class forward. Review cases. You cant do Finance
without crunching the numbers. You cant decide if the
numbers are good or bad without the numbers. Its not
about the decision its a logical process.
ABP process:
o Situation Analysis
o Identify the problem/decision objective. A problem
requires you to act.
o Identify the options/alternatives
o Identify the criteria
o Qualitatively and quantitatively analyze the options
using the criteria
o Take the decision select a viable option
o Create an action plan
o Implement within the constraints of time and money
o Get feedback
Assurance of Learning elements:

Analysis of business problems

Global perspective
Leadership skills (taking initiative)
Communication skills written and oral: Report writing.
The kind you can present to a Board.
o Ethical disposition
Prerequisites for the class:
o Analysis of financial statements
o Ratio analysis
Difference between Finance and Accounting:
o Finance: Futuristic planning and acquiring assets
o Accounting: Historical recording and reporting financial
transactions
o Focus of accounting is profit
o Focus of finance is:
Growing sustainably
Profitability
Net cash flow (liquidity)
Asset efficiency
Gearing/leverage
Value = wealth = shareholders
Business Cycle:
o Have expectations about future outcomes making
money or creating a surplus so that you can continue
operations
o Spot opportunities
o Create a business strategy
o Operationalize strategy (all activities on the value chain)
Effectiveness is measured by P&L
o Design investments in resources or assets
o Look for finance (debt or equity)
Profit-making organizations give funds (value) to the owners
while non-profit organizations plough it back
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ACTION ITEMS:
Read notes on Financial Analysis and Financial Forecasting.