Financial Decision Making

Course goals

Learning objectives

At the end of the course the student is able to:

• Understand how investor preferences and stakeholder demands affect the demand for financial decision making practices within organizations
• Apply advanced financial management techniques (related to costing, business case analysis and valuation) to advise the management of organizations on value creation
• Understand and reflect upon scientific papers that discuss the applicability of financial decision making practices in firms
• Structure, present and discuss their own business case analysis which provide the basis for managerial decision making

Content

Financial decision making is concerned with the provision of relevant information to managers within the organization to help improve planning activities and assist in decision making. In practice, employees in the finance department engage in activities such as analyzing past performance, evaluating business cases and providing relevant information for a variety of managerial decisions. Amongst the topics to be discussed are:

• Short term cost management (including net working capital management)
• Long term cost management (including capacity management and outsourcing)
• Customers as assets (customer profitability and customer value)
• Managing long term performance (innovation, including target costing and R&D)
• Managing nonfinancial performance (including ESG)
• Role of the finance function (impact of technology)

This course aims to prepare students for a job in the Finance function of organizations. The Finance function of organizations (including the Chief Financial Officer, CFO) is the intermediate between financial markets and the rest of the organization. It ‘translates’ investor preferences and other stakeholder demands to the financial management practices that are used within the firm to achieve the (financial) goals of the organization (including dividend forecasts, commitments to suppliers and bank covenant obligations).

Format
In the lectures, a selection of financial management decision making topics will be discussed and explained in depth, using real-world examples. The tutorials provide students with more hands-on financial management experience as well as with academic reflections on why specific management financial management practices will be used in specific situations, and what the potential consequence of the using these practices may be.

Assessment method
The final course grade will be the weighted average of several components:

• Assignments (30%);
• Final exam (70%, 2 hours, digital exam).

Intended Learning Outcomes
At the end of the course, the student is able to

• Think and act at an academic level in the financial management domain
• Develop financial management policies to optimize (financial) decision making in organizations
• Distinguish between different steps in the analysis of a financial decision, and take steps to arrive at a motivated solution
• Effectively work in teams