UCL School of Management

Module Fact Sheet

MSIN0102: Financial Decision Making

Taught by
Michael Kerrison
Level
Masters, level 7
Prerequisites
None
Eligibility
MM Route A, SOM PGT affiliates by prior agreement
Terms
Term Two
Delivery method
3-hour lecture (x 10 weeks)
Assessment
Closed book exam (3 hours) 50%
Team based project 40%
Moodle Quiz 10%
Previous Module Code
MSING062

Course overview

The module blends quantitative financial information with qualitative contexts to facilitate sound financial decision making. The content includes

  • Nature of cost and issues in cost determination
  • Full v Contribution costing
  • Activity Based Costing (ABC);
  • CVP analyses for decision making
  • Relevant costs for decision making
  • Capital Investment appraisal decisions
  • Budgeting and control decisions
  • Determining cost of capital and associated issues, and implications for decision making, including business valuations
  • Working capital management decisions.

The module uses a flip approach, with video material accessed and studied by students prior to lecture sessions, accompanied by on-line formative assessments, allowing more time in lecture sessions for active engagement with case scenarios. 

Aims of the module: The overall aim of this module is to establish understanding of key issues and applied methodologies relating to selected management accounting and financial management frameworks used by managers when faced with making financial decisions in the context of the business environment. By understanding the nature and relevance of different types of cost and related financial information short and longer term financial decision making is enhanced. This helps in planning for and subsequently controlling operations. It examines the blend of financial analysis and managerial judgment required to make sound decisions.

Learning outcomes

Upon successful completion of the module, a student will be able to:

  • Understand  and distinguish between the roles of profit, cash, and ‘cost’ in decision making
  • Understand and apply differing definitions and interpretations of the term ‘cost’ and the implications for decision making
  • Identify issues in overhead cost recovery, understand their impact on decision making, and recognise how activity based costing (ABC) improves decision making
  • Understand the nature and uses of contribution and CVP analysis, apply those ideas to break even analysis, and decisions associated with scarce resources, limiting factors, and pricing
  • Understand the nature of incremental cash flows and their role in relevant costs for decision making
  • Undertake investment appraisal decisions, taking account of the issues of risk and cost of capital, applying the ideas of accounting rate of return (ARR), payback, net present value (NPV), internal rate of return (IRR)
  • Identify, calculate and critique the determination of cost of capital using a range of approaches
  • Use a range of approaches to valuations of businesses
  • Make sense of issues in the management of working capital.

Topics covered

  • Cost challenges in decision making.
  • Cost/volume/profit analysis.
  • Relevant costs for decision making (incremental cash flows)
  • Capital expenditure investment decisions 1 (CAPEX 1).
  • Capital expenditure investment decisions 2 (CAPEX 2).
  • Financing decisions
  • Issues in determining cost of capital.
  • Business valuation(s)
  • Planning for and managing budgets
  • Issues in managing working capital.

Assessment summary

There are three summative assessment components:

  • Closed book exam (3 hours) 50% - this will normally be undertaken in Term 3 (summer term).
  • Team based project 40% - with teams comprising, in an ideal world, 2 members. Where more or fewer than 2 students are in a team the demands of the project may be amended at the discretion of the module leader.
  • Moodle Quiz 10% - this is an on-line test in Week 6 (Reading Week). It may be undertaken on or off campus. It lasts for one hour and is automatically marked by Moodle.

There is a range of formative assessments usually delivered and assessed by Moodle, supplemented by in-class formative assessments.

Current students should refer to Moodle for specific details of the current year’s assessment.

Essential reading

The set text is a ‘custom’ text book, edited by the module leader and published by Pearson. This is: Making Sense of Financial Decision Making. At the time of preparation of this module description (July 2017) that custom text is underway and has not been completed and accordingly no ISBN number is available.

Past versions of this module

MSING062 17/18

Last updated Friday, 17 August 2018