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AFCP861 – Corporate Financial Strategy

2019 – AFC Term 1 City

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff Unit Convenor / Lecturer
Anthony Carlton
Contact via Email
Credit points Credit points
2
Prerequisites Prerequisites
(Admission to MAppFin or MAppFin(Adv) or GradDipAppFin) and ECFS866
Corequisites Corequisites
Co-badged status Co-badged status
Unit description Unit description
A company's financial strategy requires simultaneous decisions about capital structure, dividend and capital management, cash levels, financial risk profile and target credit rating. All of these decisions must be made in the context of the company's operating performance and growth strategies. Taking the CFO perspective, this unit will give students the opportunity to analyse and develop a company's preferred financial strategy. This unit should appeal to those involved in developing financial strategy for corporations, and investment and corporate bankers who might advise CFO's on financial strategy. The unit also addresses issues in: managing external stakeholders, particularly investor relations; risk allocation between various stakeholders; and the role of complex financial structures. The unit also equips students to evaluate alternative equity raising and capital management transaction structures. Although the unit will take a strategic perspective, students will be able to develop financial modelling skills to support the necessary analysis.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at https://students.mq.edu.au/important-dates

Learning Outcomes

On successful completion of this unit, you will be able to:

  • Analyse and explain the types of decisions required to integrate financial strategy that support organisational objectives, and recognise the role of financial markets.
  • Critically evaluate trade-offs in developing corporate financial strategy, and make appropriate recommendations.
  • Identify and critically assess the impact of risk on the design of corporate financial strategy.
  • Explain and critically assess vanilla and non-vanilla financing products in developing financial strategy.
  • Identify and resolve issues in developing financial strategy for offshore operations

General Assessment Information

To pass this unit the student needs to (1) Achieve an aggregate mark of 50 or more, and; (2) Pass the Final Exam.

Assessment Tasks

Name Weighting Hurdle Due
Pre-unit Assignment 10% No First Class
Assignment 35% No Refer to iLearn
Final Exam 55% Yes Refer to Timetable

Pre-unit Assignment

Due: First Class
Weighting: 10%

Summary of Assessment Task

Individual / Group: Individual.

Due Date: First Class.

Grading Method: Refer to 'Standards Required to Complete the Unit Satisfactorily' section.

Submission Method: At or before the first class. Please bring a copy to class for class use as well.

Duration: Refer to Assignment Coversheet.

Extension Requests: 

  • No extensions will be granted unless prior arrangements have been made with the lecturer. No submission will be accepted after solutions have been provided. 
  • In the absence of such arrangements, late submission will result in zero marks, unless an application for Special Consideration is made and approved. Refer to MAFC Program Rules at www.mafc.mq.edu.au for information on the University’s Special Consideration Policy.

On successful completion you will be able to:
  • Analyse and explain the types of decisions required to integrate financial strategy that support organisational objectives, and recognise the role of financial markets.
  • Explain and critically assess vanilla and non-vanilla financing products in developing financial strategy.

Assignment

Due: Refer to iLearn
Weighting: 35%

Summary of Assessment Task

Individual / Group: Individual.

Due Date: Refer to the unit's iLearn site.

Grading Method: Refer to 'Standards Required to Complete the Unit Satisfactorily' section.

Submission Method: Online via Turnitin on the unit's iLearn site.

Duration: Refer to Assignment Coversheet.

Extension Requests: 

  • No extensions will be granted unless an application for Special Consideration is made and approved. If you have extenuating circumstances that prevent you from submitting your assignment by the due date, you must apply for Special Consideration as soon as reasonably possible. Refer to MAFC Program Rules at www.mafc.mq.edu.au for information on the University’s Special Consideration Policy.
  • Unless such prior arrangements have been made, any late submission of assignments will automatically be penalised. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission – 20% penalty).
  • No submissions will be accepted after solutions have been posted.

Other Information: 

  • The assignment is included in the unit notes.
  • It will give students the opportunity to apply the techniques used in the unit. It is expected there will be a choice of applications, to cater for individual student interests.
  • The requirements of the assignment will be further reviewed in class.

On successful completion you will be able to:
  • Analyse and explain the types of decisions required to integrate financial strategy that support organisational objectives, and recognise the role of financial markets.
  • Critically evaluate trade-offs in developing corporate financial strategy, and make appropriate recommendations.
  • Identify and critically assess the impact of risk on the design of corporate financial strategy.

Final Exam

Due: Refer to Timetable
Weighting: 55%
This is a hurdle assessment task (see assessment policy for more information on hurdle assessment tasks)

Summary of Assessment Task

Individual / Group: Individual.

Due Date: Refer to Timetable.

Grading Method: Refer to 'Standards Required to Complete the Unit Satisfactorily' section.

Submission Method: As per MAFC Program Rules at www.mafc.mq.edu.au

Duration: 2 hours plus 10 minutes reading time.

Examination Conditions: 

  • All examinations are closed book. However, permitted materials and aids are:
    • A study sheet, prepared by the student (one double-sided A4 page), to be advised by the Lecturer prior to the Exam.
    • Calculators - permitted calculators are noted under ‘Calculators’ below.
  • Exam times and locations are noted in the unit timetable at www.mafc.mq.edu.au.
  • Refer to MAFC Program Rules at www.mafc.mq.edu.au.

Extension Requests: 

  • You are expected to present yourself for examination at the time and place designated in the relevant MAFC Timetable at www.mafc.mq.edu.au.
  • Deferral of an examination is not permitted unless an application for Special Consideration is made and approved.
  • Refer to MAFC Program Rules at www.mafc.mq.edu.au for information on the University’s Special Consideration Policy or non-attendance at an examination.

On successful completion you will be able to:
  • Critically evaluate trade-offs in developing corporate financial strategy, and make appropriate recommendations.
  • Identify and critically assess the impact of risk on the design of corporate financial strategy.
  • Explain and critically assess vanilla and non-vanilla financing products in developing financial strategy.
  • Identify and resolve issues in developing financial strategy for offshore operations

Delivery and Resources

CLASSES

Face-to-Face Teaching: Generally 18 hours.

Timetable: Detailed timetable for classes are on the Centre’s website at www.mafc.mq.edu.au

Consultation Times: 

Students who wish to contact any of the teaching staff may do so through:

  • The unit’s iLearn site, in relation to general queries (so that all students may benefit); or 
  • Individual consultation with the lecturer by email in the first instance, if necessary.

REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS

Text: Nil

Course Resources:

  • The unit notes and iLearn contain all the requisite material for the classes, assignments and final examination. The value of the unit will be maximised if you are able to review unit notes and readings prior to classes. Please critically assess the material in these readings, in particular the case studies.
  • iLearn contains spreadsheet solutions for the problems in the notes, and additional discussion on a number of items. Students should download the spreadsheets prior to class, and you should bring printouts or a laptop to help you follow them in class.
  • Students should assume any additional readings are examinable unless otherwise advised.

Lecture Notes: Available in printed form and electronically via iLearn.

Case Studies: 

  • There are a number of case studies in the notes (Trees and Portes). Please read these cases before classes, as they will be discussed in class.
  • Students are not required to solve the cases – this will be done in class.

Pre-unit Materials: 

  • Your time in class will benefit from having read the course material prior to class;
  • The pre-unit assignment draws on your Corporate Finance material, so should be regarded as an opportunity for quick revision of Corporate Finance notes on financial strategy.

Useful References: 

  • There are books available to help develop your financial modelling skills. Two helpful books are:
    • Craig W. Holden, Excel Modelling in Corporate Finance, 2nd ed., Pearson Prentice Hall, 2005; or
    • Michael Rees, Financial Modelling in Practice, Wiley, 2008.

Calculators: 

  • A financial calculator that can handle time value of money calculations is required.
  • In examinations, hand held calculators are permitted. Mobile phones and computers are not permitted.

Assumed Access:

  • Access to a computer with word processing and spreadsheet capability is assumed, as is general student computer literacy.
  • Access to a laptop, taken to class, is desirable.

TECHNOLOGY USED AND REQUIRED

Unit iLearn Site: 

  • Found by logging on to iLearn ilearn.mq.edu.au, then clicking on AFCP861 Corporate Financial Strategy.
  • This is where you will find links to forums, downloadable resources and other important pages.
  • iLearn forums allow you to communicate with other students and lecturer(s) and may provide supplementary material.
  • Please post questions to forums at least 24 hours prior to an assignment submission date or an examination date. Questions posted after that time may not be answered. Please try to not leave your questions to the last few days.

Important Notice: 

  • It is important that you familiarise yourself with the unit’s iLearn site. 
  • Students should check the unit’s iLearn site regularly (minimum twice a week and prior to all lectures) and look for updates and distribution of materials (including case studies) related to the unit or assessments and, if relevant, participate in forum discussions. 

Unit Schedule

1. ELEMENTS OF FINANCIAL STRATEGY: ALTERNATIVES & TRADEOFFS (2 SESSIONS)

We examine the elements in establishing an integrated financial strategy, including capital structure, dividend policy, cash and risk profile, and how it relates to other key corporate strategies, particularly growth. We review how each element of financial strategy is related to value, and how to make trade-offs between these various elements of financial strategy to develop an overall strategy that best supports organisational strategy and objectives:

Material covered in this topic includes:

  • The link between financial strategy, risk management and value
  • Practical guidelines on financial strategy
  • Life cycle models of financial strategy
  • Brief review of risk management alternatives: especially capital versus hedging etc
  • Integration of risk management and financial strategy
  • Review of empirical evidence on financial strategy

2. MODELLING TOOLS TO HELP IN DESIGNING FINANCIAL STRATEGY

In this topic we review the analytical tools available to help design financial strategy. These include financial modelling, ratings prediction models, as well as a review of cash flow processes and how they impact an assessment of risk:

Material covered in this topic includes:

  •  Financial modelling tools for assessing risk
  •  Analytical models of capital structure
  •  Ratings prediction models

3. DESIGNING COMPLEX CAPITAL STRUCTURES

Many companies have capital structures that comprise more than ordinary shares, for equity, and corporate debt. Hybrid instruments, convertibles, subordinated debt and project finance are some examples. We will examine the role of these complex capital structures and how to assess the benefits and costs:

Material covered in this topic includes:

  • Menu of choices on non-standard debt and equity products
  • Assessing the true cost of non-standard financial products
  • Review of industry specific capital structures

4. CAPITAL STRUCTURES IN MULTINATIONALS

Financial structures in multinationals add another layer of complexity, with the need to address issues of tax, currency risk, repatriation etc. This section reviews financial strategy options for multinational companies:

Material covered in this topic includes:

  • Financial strategy complexities posed by multinational operations
  • Funding and risk management strategies available to MNCs
  • Integrating financial and business strategies in MNCs

5: MANAGING STAKEHOLDERS (PARTICULARLY SHAREHOLDERS)

Examines important non transaction aspects of financial strategy:

Material covered in this topic includes:

  • Investor relations strategies
  • Communications and disclosure strategies (including the role of ‘guidance’)

Learning and Teaching Activities

Strategy

The Master of Applied Finance degree adopts a deep teaching and learning strategy, in which students acquire and retain knowledge and also are able to make sense of the issues and concepts and apply them in the “real world”. The degree relies heavily on student engagement and participation by: (a) Continuous learning throughout the term. This is encouraged through a combination of students undertaking prescribed reading throughout the units and/or completion of practice problems, case studies, assignments, class presentations etc and interaction via forums in the unit’s iLearn site; and (b) Assessments, which enable the student to demonstrate his/her understanding of the learning objectives achieved through the continuous learning.

Student Participation

Students participate in this unit by: (a) Attending lectures and participating in class discussion; (b) Before each class, completing the recommended readings of notes and text, and working systematically through suggested problem sets; (c) Interacting on the unit’s iLearn site; and (d) Completing all assessment tasks and exams. On average, the unit will require students to complete, for every hour of class time, approximately 3 hours private study.

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central). Students should be aware of the following policies in particular with regard to Learning and Teaching:

Undergraduate students seeking more policy resources can visit the Student Policy Gateway (https://students.mq.edu.au/support/study/student-policy-gateway). It is your one-stop-shop for the key policies you need to know about throughout your undergraduate student journey.

If you would like to see all the policies relevant to Learning and Teaching visit Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central).

Student Code of Conduct

Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/study/getting-started/student-conduct​

Results

Results published on platform other than eStudent, (eg. iLearn, Coursera etc.) or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au or if you are a Global MBA student contact globalmba.support@mq.edu.au

Students should also consult the MAFC Program Rules found at http://www.mafc.mq.edu.au

Student Support

Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/

Learning Skills

Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.

Student enquiry service (MAFC-specific)

For all student enquiries, please contact studentsupport@mafc.mq.edu.au

 

Student Enquiry Service

For all student enquiries, visit Student Connect at ask.mq.edu.au

If you are a Global MBA student contact globalmba.support@mq.edu.au

Equity Support

Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.

Learning Skills

Learning Skills (www.students.mq.edu.au/support/learning_skills/) provides academic writing resources and study strategies to improve your marks and take control of your study.

  • Workshops
  • StudyWise
  • Academic Integrity Module for Students
  • Ask a Learning Adviser

IT Help

For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/

When using the University's IT, you must adhere to the Acceptable Use of IT Resources Policy. The policy applies to all who connect to the MQ network including students.

Graduate Capabilities

PG - Critical, Analytical and Integrative Thinking

Our postgraduates will be capable of utilising and reflecting on prior knowledge and experience, of applying higher level critical thinking skills, and of integrating and synthesising learning and knowledge from a range of sources and environments. A characteristic of this form of thinking is the generation of new, professionally oriented knowledge through personal or group-based critique of practice and theory.

This graduate capability is supported by:

Learning outcomes

  • Analyse and explain the types of decisions required to integrate financial strategy that support organisational objectives, and recognise the role of financial markets.
  • Critically evaluate trade-offs in developing corporate financial strategy, and make appropriate recommendations.
  • Identify and critically assess the impact of risk on the design of corporate financial strategy.
  • Explain and critically assess vanilla and non-vanilla financing products in developing financial strategy.
  • Identify and resolve issues in developing financial strategy for offshore operations

Assessment tasks

  • Pre-unit Assignment
  • Assignment
  • Final Exam

PG - Research and Problem Solving Capability

Our postgraduates will be capable of systematic enquiry; able to use research skills to create new knowledge that can be applied to real world issues, or contribute to a field of study or practice to enhance society. They will be capable of creative questioning, problem finding and problem solving.

This graduate capability is supported by:

Learning outcomes

  • Analyse and explain the types of decisions required to integrate financial strategy that support organisational objectives, and recognise the role of financial markets.
  • Critically evaluate trade-offs in developing corporate financial strategy, and make appropriate recommendations.
  • Identify and critically assess the impact of risk on the design of corporate financial strategy.
  • Explain and critically assess vanilla and non-vanilla financing products in developing financial strategy.
  • Identify and resolve issues in developing financial strategy for offshore operations

Assessment tasks

  • Pre-unit Assignment
  • Assignment
  • Final Exam

PG - Capable of Professional and Personal Judgment and Initiative

Our postgraduates will demonstrate a high standard of discernment and common sense in their professional and personal judgment. They will have the ability to make informed choices and decisions that reflect both the nature of their professional work and their personal perspectives.

This graduate capability is supported by:

Learning outcomes

  • Analyse and explain the types of decisions required to integrate financial strategy that support organisational objectives, and recognise the role of financial markets.
  • Critically evaluate trade-offs in developing corporate financial strategy, and make appropriate recommendations.
  • Identify and critically assess the impact of risk on the design of corporate financial strategy.
  • Explain and critically assess vanilla and non-vanilla financing products in developing financial strategy.
  • Identify and resolve issues in developing financial strategy for offshore operations

Assessment tasks

  • Pre-unit Assignment
  • Assignment
  • Final Exam

Important Notice

This Unit Guide may be subject to change. Students will be advised, via an "Announcement" on iLearn, if the Unit Guide is changed.

The latest version is available at https://unitguides.mq.edu.au/.

Students should read the Unit Guide carefully at the start of term. It contains important information about the unit. If anything is unclear, please consult one of the unit lecturers.

Standards Required to Complete the Unit Satisfactorily

University Policy on Grading:

  • Macquarie University’s Academic Senate has established a Grading Policy available at https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policies/assessment. Your final result will include: 
    • A Grade ranging from Fail Hurdle to High Distinction; and
    • A numerical Mark which is a summation of the individual assessment components, providing the examination component is passed.
  • It is important to note:
    • The Policy does not require that a minimum or maximum number of students are to be failed in any unit; 
    • Grades will not be allocated to fit a predetermined distribution; and
    • Grades for all individual assessment items will be released to students, but Marks may not necessarily be released.

Specific Unit Grading: 

  • To pass this unit the student needs to (1) Achieve an aggregate mark of 50 or more, and; (2) Pass the Final Exam.
    • Students who have attained a total raw mark of 50% or greater in a unit, but have failed the unit’s exam requirement and who have demonstrated “sufficient effort” in the exam, will be granted a single opportunity to sit a Supplementary Exam which will be graded on a pass/fail basis. The unit Mark and Grade for students who pass this examination will be those corresponding to the original total raw mark of all their assessment tasks, including the original exam. That is, the Supplementary Hurdle Exam only determines the meeting of the hurdle requirement. Students who have attained a raw mark of 50% or greater in a unit, yet failed all attempts at the requirement, will be awarded an Fail Hurdle Grade with a final Mark of 49.
  • All final Marks and Grades in the Applied Finance Centre are determined by a grading committee and are not the sole responsibility of the Unit Convenor.
Grade Expectation
High Distinction Provides consistent evidence of deep and critical understanding in relation to the learning outcomes. There is substantial originality and insight in identifying, generating and communicating competing arguments, perspectives or problem solving approaches; critical evaluation of problems, their solutions and their implications; creativity in application as appropriate to the discipline.
Distinction Provides evidence of integration and evaluation of critical ideas, principles and theories, distinctive insight and ability in applying relevant skills and concepts in relation to learning outcomes. There is demonstration of frequent originality in defining and analysing issues or problems and providing solutions; and the use of means of communication appropriate to the discipline and the audience.
Credit Provides evidence of learning that goes beyond replication of content knowledge or skills relevant to the learning outcomes. There is demonstration of substantial understanding of fundamental concepts in the field of study and the ability to apply these concepts in a variety of contexts; convincing argumentation with appropriate coherent justification; communication of ideas fluently and clearly in terms of the conventions of the discipline.
Pass Provides sufficient evidence of the achievement of learning outcomes. There is demonstration of understanding and application of fundamental concepts of the field of study; routine argumentation with acceptable justification; communication of information and ideas adequately in terms of the conventions of the discipline. The learning attainment is considered satisfactory or adequate or competent or capable in relation to the specified outcomes.
Fail Does not provide evidence of attainment of learning outcomes. There is missing or partial or superficial or faulty understanding and application of the fundamental concepts in the field of study; missing, undeveloped, inappropriate or confusing argumentation; incomplete, confusing or lacking communication of ideas in ways that give little attention to the conventions of the discipline.
Fail Hurdle Student has obtained a raw mark over 50, yet failed all available attempts of at least one hurdle assessment.

Review of Grade and final examination Script viewing:

  • A student who has been awarded a final grade for a unit and who does not believe it is an accurate reflection of their performance, and has grounds for such a claim and can demonstrate those grounds, may apply to have their grade reviewed. 
  • For information on requesting a review of grade and/or viewing your final exam script, please refer to the University’s Grade Appeal Policy at http://www.mq.edu.au/policy/docs/gradeappeal/policy.html and MAFC Program Rules at http://www.mafc.mq.edu.au