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

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. 

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’)

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.

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.

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.