FINANCIAL

MANAGEME
NT

INTRODUCTION
UNDERSTANDING

THE NEED OF THE COURSE

CONTENT OF THE COURSE
THE INSTRUCTORS OF THE COURSE
THE DIVISION OF TOPICS IN THE
COURSES
ASESSEMENT OF THE COURSE

 The role of financial managers includes

the followings:
Financial Analysis and Planning
(Forecasting)
Investment decision making
Decision to finance
Controlling and monitoring
Dealing with financial market.
Risk management

The need for financial

management..
: It is also becoming increasingly important for
people in marketing, accounting, production, and
other areas to understand finance in order to do a
good job in their field. **Thus, there are financial
implications in virtually all business decisions, and
non-financial executives simply must know enough
finance to work these implications into their own
specialized analyses
WHO INVOLVE? WHOSE RESPONSIBILITY?
Any changes in financial management as economic
changes? What is the impact of economic changes
on financial management

Lecture Planning..
1

Introduction to financial management, business

organisation, financial system in Malaysia
Investment Decision Making-intro
Strategic Financing Decision - Intermediate and long
term
Merger and acquisition

Financial Analysis and Planning. Ratio analysis, financial

statement
Financial Analysis
Working Capital Management Current asset, cash
conversion cycle

Evaluation of investment proposal Non- discounted

methods
Investment Appraisal discounting methods
Long term financing required rate of return, leverage
and capital structure determination.

Assessment..
1 PART @ 20 %
1 OPEN CRITICAL ESSAY
Is the financial system relying on people or vice versa?

1 GROUP ASSIGNMENT
Discuss what are common financial issues in
construction at the national and business organisation.
Propose strategies to tackle problems in

1 INDIVIDUAL ASSIGNMENT
The national economy and what is its impact on
construction industry. Comment the current state of
construction industry in Malaysia and anticipate its
future
Students email to be invited to Dropbox

ASSIGNMENT
Critically discuss the impact of local and global
economy on the construction industry.
Illustrate in detail how the impact manifested
in the the industry using several macro
economic indicators. To conclude if the
construction industry is severely affected by
the economys health, comparison with other
industry must be made.
-- assignment to be submitted end Oct

INDIVIDUAL
ASSIGNMENT

You are required to choose a company listed on Bursa

Malaysia. It is important that you have access to the
last two years (2013 & 2014
1.

Based on the company you have selected, write a brief

introduction on the business including historical background,
nature of business, financial performance and the industry in
general

2.

Based on the latest financial statements of the company

identify and explain the amount of financing sources the
company have from the short term, intermediate and long
term financing. Compare each of the financing sources to the
companys total amount of financing

3.

Based on your answers in Part 2 and the companys financing

requirements, identify and explain the companys main source
of financing. Evaluate the importance of the financing source
and the effects on the companys capital structure

GROUP ASSIGNMENT
Merger and acquisition (M&A) form growth
strategy in business. In Malaysia, the strategy
undertaken locally. However, there is an
emerging pattern on global merger and
acquisition.

Using an appropriate example (s), critically

discuss merger and acquisition (M&A) and how
the global M&A differ form local/internal merger.
Show how each offer merits to the growth
strategy.

Topic for discussion

IF YOU HAVE EXTRA MONEY EVERY MONTH?
WHAT ARE YOU GOING TO DO WITH IT?
HOW TO BENEFIT/INVEST THE ADVANCE
PAYMENT THAT A CONTRACTOR GET.

Know our FINANCIAL

SYSTEM
BANKING
NONBANKING

Role of financial
System
Financial Intermediation surplus

unit to deficit unit and vice versa..via

1. Direct transfer from surplus to deficit
without financial intermediation- share
issuance for the purpose of getting fund.
(Certificate issued as security)
2. Transfer via financial intermediation.
Surplus unit will deposit in intermediation
which later distributed to deficit unit in
terms of loan etc.

THE STRUCTURE OF FINANCIAL

SYSTEM IN MALAYSIA

1.

2.

FINANCIAL INSTITUTIONS
BANKING SYSTEM the largest
component of the financial system

FINANCIAL MARKETS

1.

MONEY AND FOREIGN

EXCHANGE MARKETS short
term maturity < 1 year .. T-Bill

2.

CAPITAL MARKETS formal

market, long term asset eg.
Bond for the purpose of
funding. Bursa Malaysia,
formal premise. Indices:
Composite, Gold, Second
Board and Sectorial

3.

DERIVATES MARKETS-option

4.

OFF-SHORE MARKETSintegrated offshore centre

withbanking, insurance,
investment holding etc

NON-BANK FINANCIAL
INTERMEDIARIES - consists of five
(5) groups of institutions

Provident and Pension Funds

Insurance companies
The development of finance
institutions
Savings institution
Other non-bank intermediaries

and future

Financial system in
Malaysia
The members of banking system

Bank Negara Malaysia

Commercial Bank
Financial Institutions
Merchant Bank
Others
Discount houses
Offshore banks in Labuan(IOFCInternational Offshore Financial Centre)

BANK NEGARA MALAYSIA

OBJECTIVES MAINTAIN FINANCIAL
STABILITY
ISSUE CURRENCY AND KEEP THE RESERVES
SAFEGUARDING THE VALUE OF THE CURRENCY
ACT AS A BANKER AND FINANCIAL ADVISER TO THE
GOVERNMENT
PROMOTE MONETARY STABILITY AND SOUND
FIANNCIAL STRUCTURE; AND
INFLUENCE THE CREDIT SITUATION TO THE
ADVANTAGE OF MALAYSIA.

Saving and Investment

Instruments

Current Account- deposit account that offer cheque facility. Offered by

commercial bank
Saving account- interest rate offered to the clients offered by commercial
bank and financial company
Fixed deposit account investment account- an amount deposited for certain
maturity period.
Deposit certificate- a certificate issued by bank on the amount deposited and
fixed interest to be paid. It is marketable before its maturity.
Repo (Buy Back Agreement) an agreement of selling valuable paper to
investor with an agreement to buy back the paper in the future. Maturity terms
based on agreement on both parties
Ordinary Shares- equity security traded in the capital market. The right to
ownership and future cash flow of the company.
Bond- loan security sold by government or corporate bodies to fund the project
and company business. The bond holders are promised to coupon rate annually.
The bond holders will get priority on company asset compared to O/S holders

FINANCIAL
RESTRUCTURING..OBJECTIVES
Long Term

SHORT
TERM

Create resilient banking system to withstand

future shocks

Halt vicious cycle

Stimulate economic recovery

Provide foundation to broaden & deepen

financial markets & strengthen financial
infrastructure to meet future challenges

Encourage bank to lend

Manage
NPLs

Capital

Danaharta
CDRC
Rehab
Unit

Dana
modal

Develop efficient & competitive banking

sector to support economic growth &
contribute as sector of growth

Funding

Special
funds

Finance Companies merger programme

BNM to initiate mergers and use Danamodal
to facilitate consolidation of the banking sector
and to rationalise and revamp management
where necessary
Asset backed securitisation
Plan to chart the direction of the banking
sector

Business
Organisation
The umbrella of business
What type of organisation
Which suit what?

Forms of Business
Organisation

Sole proprietorship is an unincorporated

business owned by one individual. The
proprietorship has key advantages for
small operations. It is easily and
inexpensively formed, no formal charter
for
operation
is
required
and
a
proprietorship
is
subject
to
few
government regulations. It pays no
corporate income taxes but income is
subject to personal income taxes.

Advantages
-easy to start this form of business
-little capital required
-the owner can work as hard as he wants to
for the rewards are all his
-good communications and personal contact
with staff and customers can be developed.
-Flexible, due to small
fast decision making

organisation and

Disadvantages
- inability to obtain large sums of
capital.
- Unlimited personal liability for
debts.
- It is limited to the life of the
individual who created it.
-Expansion is limited

Partnership
Partnership: when two or more
persons associate to conduct business,
a partnership is said to exist.
Partnerships may operate under
different degrees of formality ranging
from formal, oral understanding to
formal agreements and registered.

What makes difference between

Limited

General

1.

Liability limited to the amount

invested

1.

Liability is not limited to

amount invested

2.

Profit distributed based on what

been agreed during the
formation of partnership

2.

Profit distributed according

to amount invested

3.

Partner not directly involved in

the management and decision
making

3.

Partner involves directly in

management & decision
making

4.

Partnership need not to be

resolved in the event of the
death or partner decided not to
be a partner anymore..

4.

Partnership to be dissolved
in the event of death or ..

5.

Partnership can be named

after partners name

5.

Partnerships firm cannot be

named after partners name.

Partnership

The disadvantages are

(i) unlimited liability,

(ii) limited life of the organization
(iii) difficulty of transferring ownership,
and
(iv) difficulty of rising large amount of
capital.

Forms of Business
Organisation

Sole proprietorship is an unincorporated

business owned by one individual. The
proprietorship has key advantages for
small operations. It is easily and
inexpensively formed, no formal charter
for
operation
is
required
and
a
proprietorship
is
subject
to
few
government regulations. It pays no
corporate income taxes but income is
subject to personal income taxes.

COMPANY..

Sec 14(1) of the Companies Act

provides that any two or more
persons associated for any
lawful purpose may , by
subscribing their names to a
memorandum and complying
with the requirements as to
registration, form an
incorporated company

COMPANY..
A company limited by shares normal
model used by companies. The liability
of a members contribution to the
companys asset is limited to the
amount, if any unpaid to his shares.
A company limited by guarantee A company limited by both share and
guarantee
An unlimited company

Advantages..
Liability limited to amount of fund
invested
The continuation of the company
despite the death or the pulling out of
the owner
The ability to secure loan is better.

disadvantages
The formation process is expensive
and complex
Double taxes by government
(corporate taxes). Owner paid taxes on
dividend
The companys financial has to made
public.