Credits: 3
Pre-requisites: None
Core / Optional: Optional
Aim(s):To introduce corporate finance and accounting concepts for engineering managers to function effectively in the industry.
Intended Learning Outcomes:
- approach: the role of an engineer in the financial goals of a firm.
- apply: the costing and budgeting techniques for engineering projects and products.
- appraise: investment decisions for engineering projects, products and services.
- analyse: financing decisions for engineering projects and products.
- appreciate: the role of financial statement analysis in the value creation of the firm.
Course Content (Only main topics & subtopics):
- Introduction to Branches of Corporate Finance and Accounting: Financial goals of a firm: survive in business, avoid financial distress and bankruptcy, beat the competition, maximise sales or market share, minimise costs, maximise profits, and maintain steady earnings growth; the engineer’s role in the financial goals of a firm; fundamental financial concepts: time value of money; risk and return.
- Costing and Budgeting Techniques for Decision-Making:Types and nature of costs; project costing: analogous estimation, bottom-up estimation, parametric estimation, three-point estimation, cost of quality, reverse analysis and vendor bid analysis, project management estimating software and expert judgment; services and product costing: activity-based costing vs traditional costing.
- Investment Decisions: Process of capital budgeting; capital budgeting techniques – ARR, payback, NPV, IRR; effect of risk; inflation and tax on investment decisions; lifecycle costing; cost-volume-profit (break-even) analysis and decision making.
- Financing Decisions: Financing requirements of a business; sources of finance and different classifications; life cycle financing; capital structure and cost of capital; operating budgets and cash budgets; working capital management: profitability vs liquidity.
- Financial Statements and Analysis: Basic: Basic accounting concepts; accounting statements – balance Sheet; income statement; cash-flow statement; statement of retained earnings; key financial ratios; ratio analysis.
Time Allocation:
| Learning component | Hours |
|---|---|
| Theory | 15 |
| Small group activities | 30 |
| Assignments | – |
| Practical | – |
| Independent Learning | 105 |
Marks Allocation:
| Assessment | Percentage Marks |
|---|---|
| Continuous Assessments | 50% |
| Final Assessment | 50% |
Recommended Reading:
- Lawrence, J. G. (2006). Managerial Finance (11th Edition). Pearson Education. ISBN:13: 978-0-13-354640-8.
- Stephen R., Westerfield, R., Jordan, B. (2021). Fundamentals of Corporate Finance. 13th Edition. McGraw-Hill Education. ISBN: 1265553602,9781265553609.
- Weetman, P. (2016). Financial and management accounting: an introduction (7th Edition). Pearson Education, England, New York. ISBN 978-0-273-71845-1.