FIN301
FUNDAMENTALS OF FINANCIAL
MANAGEMENT
Format of Final Exam
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Two hour closed-book exam
Section 1: 20 multiple-choice questions – 30 marks
 Section 2: 02 short answer questions – 20 marks
 Section 3: 03 problem solving questions – 50 marks
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Contents covered:
Final exam will cover all topics
 Focus on the following topics:
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Chapter 5: Time value of money
 Chapter 9: Share valuation
 Chapter 11: Capital budgeting
 Chapter 13 + Chapter 14: Financing decisions
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Body of Knowledge
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In order to get a pass in the final exam, students must
achieve at least 50/100 marks.
Level of difficulties:
50 – 70 marks: basic understanding over the 13 topics
including key terms in each lecture and required exercises in
the tutorials. Thus, the best way to get a satisfactory exam
result is to review all lectures and redo all tutorial exercises.
 10 – 30 marks: medium questions required analysis and
application of theories learned during the semester.
 10 – 20 marks: more advanced questions required higher
level of analysis and comprehensiveness.
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Approximately 40% theory-based and 60% calculation
and application based questions
Lectures revision
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Topic 1: Introduction to financial management
Topic 2: Financial market
Topic 3: Financial statement
Topic 4: Financial statement analysis
Topic 5: Time value of money
Topic 6: Interest rates
Topic 7: Bonds and their valuation
Topic 8: Shares and their valuation
Topic 9: Risk and returns: portfolio theory
Topic 10: Capital budgeting
Topic 11: Capital structure
Topic 12: Dividend policy
Topic 13: Working capital management
Fundamental
concepts
Financial
assets
Corporate
actions
What is financial management?
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Financial management is an area of finance, which focuses on
decisions relating to how much and what types of assets to acquire
(capital budgeting, investment), how to raise the capital needed to
purchase assets (financing), and how to run the firm so as to
maximize its value.
Three decisions that a financial manager has to make with respect to
wealth maximization to shareholders include:
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Investment decision: Chapter 11 – capital budgeting, Chapter 7, 8, and 9 –
securities valuation and portfolio management principles.
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Financing decision: Chapter 13 – capital structure, Chapter 14 – dividend
policy.
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Asset management decision: Chapter 15 – working capital management
Decision making tools
Principle: TIME VALUE OF MONEY – Chapter 5
 Investment decisions (Ch.11)
 Project
 NPV
evaluation – capital budgeting
analysis (cost-benefit analysis)
 IRR
 Payback
 Portfolio
 Risk
and discounted payback
construction (Ch.7,8,9)
and return relationship - tradeoffs
 Diversification benefit
Decision making tools
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Financing decisions (Ch.13,14)
 Financing
cost: cost of equity capital, cost of debt, cost
of preferred shares, and average weighted cost of
capital
 What is the optimal capital structure of the firm?
 Should the firm pay dividend? If yes, what are methods
 Cash
dividend
 Stock dividend
 Other issue: stock split, stock repurchases.
 Dividend payment model – residual dividend model
Decision making tools
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Asset management (Ch.15) – Working capital
management
 Cash
, Account receivable, and Inventory management
 Account payable, Notes payable, and Accruals
management
Other factors affecting decisions of a
financial manager
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Knowledge of its business such as type of firms,
agency relationship.
Knowledge of financial market in which the firm is
participating in: capital market, money market, etc
and how those market work (efficient market?).
Other factors: management capacity, personalities,
and so on.
How to evaluate performance of a firm?
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This requires a thorough analysis over all aspects of
businesses including, but not limited to:
 Profitability
 Liquidity
 Debt
management
 Asset management
 Valuation ratio
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Two approaches:
 Financial
statement analysis
 Share valuation
Fundamental
analysis
Final Notes
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Please be aware that we might separate finance
concepts or financial decisions in some areas, but, they
are closely inter-related to each other.
There might be lots of other different uses of finance
knowledge for various purposes.
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Example: Financial statement analysis is used by a credit
rating agency.
This subject has two big goals:
Provide introductory materials of business finance
 Equip students with basic finance principles such as time
value of money concepts, risk and return concepts, and
interest rates.
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Feedback
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All of your constructive criticisms and comments over
the course are highly appreciated.
Our teaching team emails:
 Nguyen
Xuan Truong – truongnx@hanu.edu.vn
 Le Thanh Binh – binhlt@hanu.edu.vn
 Nguyen Thi Van Anh – ntva1279@gmail.com
 Nguyen Dinh Du – ndd2107@gmail.com
Financial Management in One Mind Map
To be updated in the final week. Please prepare a
mind map of your own!
Section 1: Multiple-choice questions
Sample question
A firm should raise capital according to its optimal
capital structure so as to maximize its ___
A.
B.
C.
D.
earnings per share (EPS).
stock price.
net income.
weighted average cost of capital (WACC).
Section 2: Short Answer Questions
Sample question:
Discuss (1) the information content hypothesis, (2) the clientele
effect, and (3) basing on the information content hypothesis,
explain “stock repurchase” action of a company
Section 3: Problem Solving Questions
Sample questions
Good Luck 
Keep calm and study for final exam