This CPE course identifies the three key decisions in financial strategy and looks at the links between them. These key decisions are:
▪ Investment – what projects should be undertaken by the organization?
▪ Financing – how should the necessary funds be raised?
▪ Dividends – how much cash should be allocated each year to be paid as a return to shareholders, and how much should be retained to meet the cash needs of the business?
These areas are closely interrelated. Investment decisions cannot be taken without consideration of where and how the funds are to be raised to finance them. Dividends represent the payment of returns on the investment back to the shareholders, the level and risk of which will depend upon the project itself, and how it was financed. This course explores such areas as the influence of external economic forces on financial strategy, the impact of taxation, and credit worthiness. It finally examines the repercussions involved when an entity changes its financing, investing, and dividend policy.
▪ Recognize the interrelationship between investment, financing and dividend decisions for an incorporated entity.
▪ Recognize the impact of taxation and other external influences on the development of financial strategy.
▪ Recognize the impact of investment, financing, and divdends decisions in meeting the cash needs of the entity, on future cash position, and on forecast financial statements.
▪ Recognize the impact of changes in capital structure for an incorporated entity on shareholders and other stakeholders.
▪ Recognize the impact of scrip dividends and share repurchase programs or shareholder value and entity value/financial statements/performance measures.
▪ Investment, financing and dividend decisions and the interrelationship between them in meeting the cash needs of the entity
▪ Sensitivity of forecast financial statements and future cash position to investment, financing and dividend decisions
▪ Considerations of the interests of shareholders and other stakeholders in investment, financing and dividend decisions
▪ Determine financing requirements and cash available for payment of dividends based on the overall consideration of the forecast future cash flows arising from investment decisions, business strategy and forecast business and economic variables
▪ Lenders’ assessment of creditworthiness
▪ Financial strategy in the context of regulatory requirements
▪ Consideration of taxation regulations in setting financial strategy
▪ Modeling impact of choice of capital structure on financial statements and key performance measures
▪ Impact of scrip dividends on shareholder value and entity value/financial statements/performance measures
▪ Impact of share repurchase programs on shareholder value and entity value/financial statements/performance measures
CGMA exam candidates
Management accountants wanting to develop skills in corporate financial strategy and implementation.
Management accounting experience or the equivalent.