Strategic Financial Management

This course emphasises the relationship between sustainable return and risk. Measurement of these variables and introducing the probability concepts underlying this relationship. How do you calculate the probability that a listed company trades below intrinsic value? Standard text books covering the core concepts are available.

This course assumes that students have some basic knowledge of Statistics. Students must understand at least the concepts:Regression and the normal distribution.This is a Master’s level course:On a masters level students must show that they can add value.  It is not enough to merely repeat what is in the prescribed study material. 

A basic statistical / numerical literacy is assumed for this course. 

Typically it would be beneficial if you had an understanding of the following:

•             Descriptive Statistics - Calculate mean, standard deviation, correlation and regression with a calculator.

•             Use the normal distribution tables to read off probabilities or use a calculator.

•             Monte Carlo simulation (“Monte Carlo simulation” on the Microsoft online help)

•             The equation of a straight line:  y - y1 = m (x - x1).

•             Changing the subject of a formula. 

Valuations

It is often necessary to get a valuation for a company.Note:  the same methods used to value projects are also valid when valuing companies and vice versa. 

Critical questions/learning goals:

How do we find the value of ordinary shares with non-constant growth rates?

  1. How does the Gordon formula work?
  2. What is the relationship between discount rate and IRR?

Cost of Capital

Critical questions:

What key assumptions underlie the cost of capital, the basic concept of cost of capital, and the specific sources of capital?

  1. What is the cost of each financing source?
  2. What is the weighted average cost of capital (WACC) of a specific project, and what are the alternative weighting schemes?
  3. Which procedures are used to determine break points and the weighted marginal cost of capital (WMCC)?

On successful completion of this course, the student will be able to:

  • demonstrate a critical awareness and understanding of Strategic Financial Management at the master's level that provides a basis for developing and/or applying new ideas, often within a research context.
  • apply knowledge, critical understanding, and problem-solving abilities in new or unfamiliar environments within broader (or multidisciplinary) contexts related to their field of study (Strategic Financial Management)
  • assimilate knowledge and formulate opinions with incomplete or limited information, but that include a reflection on social and ethical responsibilities.
  • communicate their assumptions, and knowledge regarding Strategic Financial Management and the rationale underpinning these, to specialist and non-specialist audiences clearly and unambiguously.
  • use the acquired skills to allow them to continue to study in a manner that may be largely self-directed and autonomous.
  • integrate knowledge from other courses of the master program and practical business and formulate critical judgments with incomplete data.

The course is offered as self-study in e-learning. The learning material is provided in the form of lectures, literature, and lecture notes. Independent learning is required. In the case of paper submissions, further research is expected in compliance with the given scientific standard. LIVE course sessions are offered to support the students with questions regarding the content. Students are supported in their scientific work by corresponding online seminars.

All lectures and learning materials are made available in the online campus GHU Campus. Students can participate in LIVE course sessions and get in direct contact with the lecturers. All lectures are recorded and are available for download 24/7. The lecture notes, as well as additional material provided by the lecturer, can also be accessed in the GHU Campus.

Documents for exam preparation consisting of lectures and lecture notes. Additional material provided by the lecturer serves as independent files and can be used to work on the exams. The examination comprises theory questions, reflection, and case study and is intended to confirm all learning objectives.

The assessment consists of a 5000-word Strategic Financial Management homework and assesses all learning outcomes. As a master-level assignment, the homework requires a command of a complex and specialized area of knowledge and skills. This implies that, in addition to demonstrating a sound grasp of the ideas and concepts relevant to the topic of thehomework, students will show that they can evaluate aspects such as conventions of approaches, their internal consistency, relevance, and applicability, as well as strengths and weaknesses.

To reach an assessment, students will consider competing approaches and draw on critiques put forward in scholarly literature. The position adopted in the assignment and any claims made must be based on a careful, coherent, and logical arguments, need to be appropriately supported with evidence from relevant scholarly sources, and should be presented in a coherent piece of writing. Sources must be referenced appropriately in-text and in a quote/reference list as set out in the GHU Referencing Guidelines.

Jan Walters Kruger

- Univ.-Prof. -