BAFN200 - Principles of Finance

Year

Credit points

Campus offering

Prerequisites

Nil

Teaching organisation

Unit rationale, description and aim

Financial decision-making skills is a knowledge set that is essential, not only for finance professionals, but also for employees at any level. Everybody needs some basic finance knowledge for decisions involving borrowing money, making investments, comparing alternative financing alternatives, etc. This unit is designed to develop students' understanding of the finance function and help them make more informed financial management decisions using real-life business finance practices.

This unit provides students with an opportunity to develop an understanding of concepts, techniques, and practices that are needed to make financial decisions in a competitive business environment. Students will gain knowledge of the major issues in business finance and the models and theories that have been developed to help us understand how the financial world works. The focus of the unit is on common investment and financing decisions and related financial concepts such as the time-value of money and valuation of different types of securities. The nature of investment decisions will be addressed, including topics such as capital budgeting, portfolio theory and the capital asset pricing model. Having considered how businesses invest their funds, students will learn how those funds are financed and their costs, including the cost of capital, capital structure decisions, dividend policy and current assets management.

The unit aims to equip students with theoretical and practical knowledge about contemporary financial management practices and tools utilized to make financial management decisions. Another notable aim of the unit is to develop an understanding of the role of the finance function including the role of environmental, social and governance (ESG) practices on financing decisions.

Learning outcomes

To successfully complete this unit you will be able to demonstrate you have achieved the learning outcomes (LO) detailed in the below table.

Each outcome is informed by a number of graduate capabilities (GC) to ensure your work in this, and every unit, is part of a larger goal of graduating from ACU with the attributes of insight, empathy, imagination and impact.

Explore the graduate capabilities.

On successful completion of this unit, students should be able to:

LO1 - evaluate ethical issues in finance both domestically and globally, and examine how ESG practices can impact financing decisions (GA2, GA5)

LO2 - estimate the cost of capital and analyse the trade-offs between debt and equity in the capital structure. (GA5, GA8)

LO3 - examine the viability of investment projects demonstrating autonomous and group work skills. (GA5, GA7)

LO4 - appraise the risk profile of a company and evaluate capital raising decisions. (GA4, GA5)

LO5 - evaluate dividend policy and working capital management of a company. (GA5, GA6)

Graduate attributes

GA2 - recognise their responsibility to the common good, the environment and society 

GA4 - think critically and reflectively 

GA5 - demonstrate values, knowledge, skills and attitudes appropriate to the discipline and/or profession 

GA6 - solve problems in a variety of settings taking local and international perspectives into account

GA7 - work both autonomously and collaboratively 

GA8 - locate, organise, analyse, synthesise and evaluate information.

Content

Topics will include: 

• introduction to finance and financial management 
• environment, social and governance (ESG) practices and financial decisions
• time value of money
• bond and share valuation
• risk and return trade-off and Capital Asset Pricing Model
• cash flows and capital budgeting 
• leverage and capital structure
• cost of capital 
• dividend policy 
• working capital management
• short and long-term financing

Learning and teaching strategy and rationale

The teaching and learning strategy is built on a “student-focused approach,” which can be described as “Level 3. Focus: what the student does” instead of a “teacher-focused approach,” ACU’s teaching policy focuses on learning outcomes for students. Our teaching aims to engage students as active participants in the learning process while acknowledging that all learning must involve a complex interplay of active and receptive processes, constructing meaning for oneself, and learning from others. ACU promotes and facilitates learning that is autonomous and self-motivated, is characterised by the individual taking satisfaction in the mastering of content and skills and is critical, looking beneath the surface level of information for the meaning and significance of what is being studied.

The schedule of the workshop is designed in such a way that students can achieve intended learning outcomes sequentially. Teaching and learning activities will apply the experiential learning model, which encourages students to apply higher-order thinking. The unit ensures that learning activities involve real-world scenarios that in turn assist with ‘real-world’ preparedness. The unit also uses a scaffolding technique that builds a student’s skills and prepares them for the next phase of the learning process. 

This unit is taught in a flipped classroom format and will require face-to-face attendance in specific physical location/s. Students will have face-to-face interactions with lecturer(s) to further their achievement of the learning outcomes. This unit is structured with required upfront preparation before workshops, most students report that they spend an average of one hour preparing before the workshop and one or more hours after the workshop practicing and revising what was covered. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise. It is up to individual students to ensure that the out of class study is adequate for the optimal learning outcomes and successes.

This unit is structured with required upfront preparation before workshops, and most students report that they spend an average of one hour preparing before the workshop and one or more hours after the workshop practicing and revising what was covered. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise. It is up to individual students to ensure that the out of the class study is adequate for the optimal learning outcomes and successes.

Mode of delivery: This unit is offered in different modes. These are: “Attendance” mode, “Blended” mode and “Online” mode. This unit is offered in three modes to cater to the learning needs and preferences of a range of participants and maximise effective participation for isolated and/or marginalised groups. 

Attendance Mode

In a weekly attendance mode, students will require face-to-face attendance in specific physical location/s. Students will have face-to-face interactions with lecturer(s) to further their achievement of the learning outcomes. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise.

Blended Mode

In a blended mode, students will require intermittent face-to-face attendance determined by the School. Students will have face-to-face interactions with lecturer(s) to further their achievement of the learning outcomes. This unit is structured with required upfront preparation before workshops. The online learning platforms used in this unit provide multiple forms of preparatory and practice opportunities for you to prepare and revise.

Online Mode

In an Online mode, students are given the opportunity to attend facilitated synchronous online seminar classes with other students and participate in the construction and synthesis of knowledge, while developing their knowledge. Students are required to participate in a series of online interactive workshops which include activities, knowledge checks, discussion and interactive sessions. This approach allows flexibility for students and facilitates learning and participation for students with a preference for virtual learning.

Assessment strategy and rationale

Assessments are used primarily to foster learning. ACU adopts a constructivist approach to learning that seeks alignment between the fundamental purpose of each unit, the learning outcomes, teaching and learning strategy, assessment and the learning environment. In order to pass this unit, students are required to achieve an overall score of at least 50% and attempt all assessment items. Using constructive alignment, the assessment tasks are designed for students to demonstrate their achievement of each learning outcome. 

Overview of assessments

Attendance;

Blended mode

Online mode

Representative texts and references

Required text

Parrino, R, Kidwell, DS, Au Yong, HH, Dempsey, M, Morkel-Kingsbury, Ekanayake, S, James, J & Murray, J 2019, Fundamentals of corporate finance, Australasian 3rd edn, John Wiley & Sons Australia, Milton. (ISBN: 978-0-730-35517-5)

Recommended references

Berk, J, DeMarzo, P, Harford J, Ford, G & Mollica, V 2017, Fundamentals of corporate finance, Pearson Australia, 3nd edn, Frenchs Forest, NSW. 

Brealey, R, Myers, S & Marcus, A 2019, EBook Fundamentals of corporate finance, 10th edn, McGraw-Hill Australia, Sydney. 

Graham, JR, Scott, BS, Adam, C & Gunasingham, B 2017 Corporate finance, Cengage Learning, 2nd Asia-Pacific edition, South Melbourne, VIC.

Hartman, L, DesJardins, JR & MacDonald, C 2017 , Business ethics: decision making for personal integrity and social responsibility, 4thrd edn, McGraw-Hill.

Ross, SA, Bianchi, Westerfield, RW & Jordan, BD, 2019, Fundamentals of corporate finance, 12th edn, McGraw-Hill Australia, Sydney. 

Watson, D. & Head, A 2019, Corporate finance: principles and practice, 8th edn, Pearson Education, London, UK.