FIN-1013 Financial Analysis and Budgeting

Business
Course Number: Co-Requisites: Pre-Requisites:
FIN-1013 N/A ACC-1004 or ACC-1094 or ACC-
1093
Prepared by: Brett Goldsmith, Professor
Approved by: Chris Perkins, Associate Dean
Approval Date: Monday, June 1, 2020
Approved for Academic Year: 2020-2021
Normative Hours: 45.00

Course Description
This course is an introduction to the essentials of financial management with a view for wealth maximization of a
business enterprise. Topics covered in this course include the following: analysis of financial performance, cost-
volume-profit analysis, financing alternatives and costs, management of working capital, budgeting, and capital
investment decisions.

Course Learning Outcomes/Course Objectives

1. Identify and describe the goals necessary for sound financial management in an organization and the roles
of the managers responsible for the finance function.
1.1 Define financial management and explain its importance.

1.2 Identify and describe the financial objectives of a business.

1.3 Identify the individuals responsible for the finance function of a business and explain their roles in
carrying out financial management activities towards the achievement of financial objectives.

1.4 Identify and describe the major types of business decisions made by financial managers.

1.5 Describe the accounting function and explain its importance to financial management.

1.6 Explain the importance of financial statement analysis and how it assists managers in achieving the
firm’s financial objectives.

2. Prepare, analyze and interpret routine financial statements and evaluate the financial performance of a
business enterprise.
2.1 Identify and describe the purpose of the four major financial statements and explain the interrelation
between them.

2.2 Identify the items reported in a Statement of Financial Position, Statement of Income, and Statement

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 of Changes in Equity and prepare these financial statements from a given trial balance.

2.3 Analyze the financial performance of a business by calculating, classifying, and interpreting
commonly used financial ratios.

2.4 Describe the importance of the Statement of Cash Flows to financial managers.

2.5 From a set of financial statements, identify and calculate the cash inflows and cash outflows of a
business during the reporting period.

2.6 Explain the three major sections of, and prepare a Statement of Cash Flows.

3. Identify and describe the principles of the budgeting process, the types of budgets applicable to a business
enterprise, and apply these principles through budget(s) preparation.
3.1 Identify and describe the key features of the budgeting process, the managers responsible for
budgeting, and the primary reasons why effective budgeting is important to an organization.

3.2 Identify the major types of budgets and describe their purpose in the overall budgeting process.
Identify and describe the specific budgets within these major types as well as their specific purpose
and inputs for their preparation.

3.3 Given the necessary data, prepare a cash budget and an operating budget for one or more periods.

4. Identify, describe and apply strategies for the management of working capital that will maximize the benefit
to the business.
4.1 Define working capital and from a set of financial statements, identify the components of working
capital and calculate net working capital.

4.2 Explain the importance of and the goal of working capital management and evaluate the
effectiveness of overall working capital management of a business enterprise.

4.3 Describe the objective(s) of and strategies for the management of (i) cash, (ii) trade receivables, (iii)
trade payables.

4.4 Identify, describe and differentiate the costs associated with inventory and the cost trade-off
requiring inventory management.

4.5 Describe the objective(s) of and strategies for the management of inventory.

4.6 Calculate the Economic Order Quantity (EOQ) and apply to the management of inventory.

5. Define and distinguish between various types of costs and perform cost-volume-profit analysis for business
planning.
5.1 In the context of Cost-Volume-Profit analysis, define, differentiate and explain the following:
(i) Volume of production (activity level)
(ii) Selling prices
(iii) Variable costs
(iv) Fixed costs
(v) Total costs
(vi) Contribution margin

5.2 From a set of cost, sales, and volume data, perform cost-volume-profit analysis for a business by
calculating and interpreting the following:
(i) Contribution margin (in total and per unit)
(ii) Profit-Volume (PV) ratio

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 (iii) Regular Break-Even Point (in units and in sales revenue)
(iv) Cash Break-Even Point (in units and in sales revenue)
(v) Profit Break-Even Point (in units and in sales revenue)

5.3 Apply the cost-volume-profit tools listed in point #5.2 above to analyze alternative cost, pricing, and
sales scenarios, and determine which alternative is the most advantageous in relation to profit.

6. Identify and distinguish between principle sources of financing available to a business and calculate related
costs associated with obtaining various forms of financing.
6.1 Identify, describe and differentiate between:
(i) Internal and External sources of financing
(ii) Financial needs and Financial requirements

6.2 Identify and describe the primary sources and related forms of:
(i) Short-term financing
(ii) Long-term debt financing
(iii) Equity financing
(iv) Lease financing

6.3 Describe and differentiate between Financial Structure and Capital Structure as well as cost of
financing and cost of capital.

6.4 Identify and calculate the cost of long-term capital sources and the weighted average cost of capital
and apply it to the evaluation of potential investments.

7. Utilize present value concepts to evaluate capital investment opportunities using various evaluation methods
and techniques.
7.1 Explain the concept of the “time value of money”.

7.2 Using interest table, calculate the following:

(i) Present value of a single sum
(ii) Present value of an annuity
(iii) Present value of an uneven series of payments/receipts

7.3 Describe the nature of capital investment decisions and explain the importance of these decisions
for a business enterprise.

7.4 Identify and describe the key elements or inputs to the capital investment decision making process.

7.5 Describe the following methods of evaluating capital investments as well as the advantages and
disadvantages of each:
(i) Payback method (traditional)
(ii) Net Present Value (NPV) method

7.6 Given the necessary data, apply the methods listed in point #7.5 above to evaluate potential capital
investments and make the optimal decision for the business.

Relationship to Essential Employability Skills

This course contributes to your program by helping you achieve the following Essential Employability Skills:

EES 2.3 Execute mathematical operations accurately. (T, A,)

EES 3.4 Apply a systematic approach to solve problems. (T, A,)

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 EES 3.5 Use a variety of thinking skills to anticipate and solve problems. (T, A,)
EES 6.10 Manage the use of time and other resources to complete projects. (A,)

Relationship to Vocational Learning Outcomes

This course provides the opportunity for you to achieve the following Program Vocational Learning Outcomes (VLO)
which will be taught and evaluated at an taught (T), assessed (A) or culminating peformance (CP) level:

BGEN - Business Administration - General

VLO 6 Perform work in compliance with relevant statutes, regulations and business practices. (T, A)
VLO 8 Use accounting and financial principles to support the management and operations of an
organization. (T, A)

BINM - International Business

VLO 7 Identify and interpret relevant international financial documents and identify financial strategies that
support an organization’s integrative trade initiatives. (T, A)

BMAN - Business Management

VLO 4 Apply basic research skills to support business decision making. (T, A)
VLO 6 Perform work in compliance with relevant statutes, regulations and
business practices. (T, A)
VLO 8 Use accounting and financial principles to support the operations of
an organization. (T, A)

BMAT - Business Management

VLO 4 Apply basic research skills to support business decision making. (T, A)
VLO 6 Perform work in compliance with relevant statutes, regulations and business practices. (T, A)
VLO 8 Use accounting and financial principles to support the operations of an organization. (T, A)

BMHM - Business Management - Human Resources

VLO 1 Analyze best practices of accounting, finance, marketing and economics into relevant aspects of
Human Resources (HR) management in order to deliver effective and efficient HR programs,
practices and services. (T, A)

BMHR - Business Management - Human Resources

VLO 1 Analyze best practices of accounting, finance, marketing and economics into relevant aspects of
Human Resources (HR) management in order to deliver effective and efficient HR programs,
practices and services. (T, A)

BMHT - Business Management - Human Resources

VLO 1 Analyze best practices of accounting, finance, marketing and economics into relevant aspects of
Human Resources (HR) management in order to deliver effective and efficient HR programs,
practices and services. (T, A)

BMIB - Business Management - International Business

VLO 1 Interpret and record business transactions, and prepare basic financial statements. (T, A)
VLO 2 Integrate knowledge of capital investments, credit planning, and finance into relevant aspects of
work (T, A)
VLO 11 Articulate various economic principles and their relationship to business. (T, A)

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BMIM - Business Management - International Business

VLO 1 Interpret and record business transactions, and prepare basic financial statements. (T, A)
VLO 2 Integrate knowledge of capital investments, credit planning, and finance into relevant aspects of
work. (T, A)
VLO 11 Articulate various economic principles and their relationship to business. (T, A)

FPWS - Financial Planning and Wealth Management

VLO 1 Differentiate among functions, roles, structure and operations of financial service organizations
(banks, credit unions, investment dealers, trust companies, etc.) in the Canadian banking system
for the purposes of career planning. (T, A)
VLO 3 Complete all work according to professional regulations, provincial legislation and ethical standards
required by the financial services industry and its regulators. (T, A)
VLO 4 Evaluate financial planning strategies using accounting principles and personal income tax
provisions. (T, A)
VLO 6 Evaluate the financial performance of a business through the analysis of financial statements and
business transactions in order to advise clients regarding potential stock investments. (T, A)

FPWT - Financial Planning and Wealth Management

VLO 1 Differentiate among functions, roles, structure and operations of financial service organizations
(banks, credit unions, investment dealers, trust companies, etc.) in the Canadian banking system
for the purposes of career planning. (T, A)
VLO 3 Complete all work according to professional regulations, provincial legislation and ethical standards
required by the financial services industry and its regulators. (T, A)
VLO 4 Evaluate financial planning strategies using accounting principles and personal income tax
provisions. (T, A)
VLO 6 Evaluate the financial performance of a business through the analysis of financial statements and
business transactions in order to advise clients regarding potential stock investments. (T, A)

Learning Resources
Required
• Bergeron, Pierre G. Finance For Non-Financial Managers., 7th Ed. Toronto, Ontario: Thomson Nelson
Canada, 2014. ISBN: 978-0-17-653083-9.
Supplemental
• As provided by the professor

Student Evaluation
1. Tests - 85%
• Test 1 - 28%
• Test 2 - 28%
• Test 3 - 29%

2. Assignments and quizzes (2 @ 5%, 5@1%) - 15%

Grade Scheme

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 The round off mathematical principle will be used. Percentages are converted to letter grades and grade points as
follows:

Mark (%) Grade Grade Point Mark (%) Grade Grade Point
94-100 A+ 4.0 67-69 C+ 2.3
87-93 A 3.7 63-66 C 2.0
80-86 A- 3.5 60-62 C- 1.7
77-79 B+ 3.2 50-59 D 1.0
73-76 B 3.0 0-49 F 0.0
70-72 B- 2.7

Prior Learning Assessment and Recognition

Students who wish to apply for prior learning assessment and recognition (PLAR) need to demonstrate
competency at a post-secondary level in all of the course learning requirements outlined above. Evidence of
learning achievement for PLAR candidates includes:
• Challenge Exam
• Project/Assignment

Course Related Information

Methodology:

This course is taught on a lecture basis with heavy emphasis on problem solving and analysis using a wide variety
of exercises and problems.

Student independent completion of a variety of text exercises and problems relating to covered material is
required. These exercises and problems offer students an opportunity to apply analytical concepts to typical
problems and decisions faced by financial managers.

It is important for the student to read the assigned chapters and attempt the related assigned exercises and
problems before they will be covered in class. Doing so will greatly enhance the student’s understanding of the
material and improve chances for success in the course.

When submitting tests, assignments, and reports, students may not submit the work of peers or others, in part or
in whole, unless previously authorized. In the preparation of assignments and reports, students may be required
to conduct formal research and cite information retrieved from scholarly or recognized publication sources.

Assignments:

Assignments must be submitted on the specified due date. It is considered a vital part of the student’s learning
process that deadlines be met and therefore, a 10% penalty per day will apply to all late assignments.

NOTE: Late assignments that have not been submitted by the time the marked assignments are handed back, will
not be accepted and will receive a “0” grade.

There will be NO additional and/or make up assignments granted at any point during the course.

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 Tests:

All tests and examinations will be written on the scheduled day at the arranged time. If, for extenuating
circumstances (which in most cases will only be for documented medical related absences), you are unable to
write, you must contact the professor PRIOR to the test for consideration of alternate arrangements. In most
cases, the make-up test will be written during exam week. If you cannot reach the professor, you must leave a
message with the program Academic Administrative Assistant at ext. #2433.

College Related Information

Academic Integrity
Lambton College is committed to high ethical standards in all academic activities within the College, including
research, reporting and learning assessment (e.g. tests, lab reports, essays).
The cornerstone of academic integrity and professional reputation is principled conduct. All scholastic and
academic activity must be free of all forms of academic dishonesty, including copying, plagiarism and cheating.

Lambton College will not tolerate any academic dishonesty, a position reflected in Lambton College policies.
Students should be familiar with the Students Rights and Responsibilities Policy, located at lambtoncollege.ca.
The policy states details concerning academic dishonesty and the penalties for dishonesty and unethical conduct.

Questions regarding this policy, or requests for additional clarification, should be directed to the Lambton College
Student Success Department.

Students with Disabilities

If you are a student with a disability please identify your needs to the professor and/or the Accessibility Centre so
that support services can be arranged for you. You can do this by making an appointment at the Accessibility
Centre or by arranging a personal interview with the professor to discuss your needs.

Student Rights and Responsibility Policy

Acceptable behaviour in class is established by the instructor and is expected of all students. Any form of
misbehaviour, harassment or violence will not be tolerated. Action will be taken as outlined in Lambton College
policy.

Date of Withdrawal without Academic Penalty

Please consult the Academic Regulations and Registrar's published dates.

Waiver of Responsibility
Every attempt has been made to ensure the accuracy of this information as of the date of publication. The content
may be modified, without notice, as deemed appropriate by the College.

Students should note policies may differ depending on the location of course offering. Please refer to campus
location specific policies:
LAMBTON COLLEGE POLICIES – applicable to all Lambton College students.
• Student Rights & Responsibilities & Discipline policy (2000-5-1)
• Test & Exam Writing Protocol (2000-1-6)
• Evaluation of Students (2000-1-3)
• (https://www.lambtoncollege.ca/custom/Pages/Policies/Policies.aspx)
CESTAR COLLEGE:
• https://www.lambtoncollege.ca/Programs/International/Lambton_in_Toronto/Student_Policies/

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 QUEENS COLLEGE:
• https://www.lambtoncollege.ca/Programs/International/Lambton_in_Mississauga/Student_Policies/
Note: It is the student’s responsibility to retain course outlines for possible future use to support applications for
transfer of credit to other educational institutions.

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