SIM 214: Investment Decision-Making

Learning Outcomes

Upon completion of the course, students should be able to:

1. develop adequate Knowledge and numerical problem- solving skills that will greatly enhance employability in any business environment;
2. display talent for analysing and interpreting financial information, assessing the performance of businesses in terms of their profitability, solvency, financial structure and working capital management;

• demonstrate acute skills and insights on how to make decisions around planning and control for a business as a whole, and evaluate individual projects by using investment appraisal techniques that take into account risk and uncertainty;
• espouse adequate knowledge and skills on how financial information can be used to assist managers and external user groups in decision-making processes;
• display understanding of how financial information can facilitate managers in making operational decisions in relation to planning and control;
• developed skills and insight on motivations for entrepreneurial activity and techniques that can be used to appraise investment decisions;
• identify the informational needs of outside user groups and the nature of the information they are provided with; and
• display skills for the analysis and interpretation of business information in order to enhance the effectiveness of business decision making.

Course Contents

Definition of investment decisions. Investment and financial reporting frameworks. Ethical principles of financial reporting. Nature, concept and framework of international financial reporting standards. Format and content of profit or loss statements. statement of cash flows Analysis. Interpretation of financial statements using ratio analysis for investments decision. Definitions, concepts and types of Costing (full and variable costing). Volume, profit analysis. Relevant costs element for decision making. Processes of budgeting and variance analysis. Working capital management. Application of Investment appraisal techniques such as payback method, accounting rate of return, net present value and internal rate of return. Other issues such as inflation and capital rationing as well as basic issues of risk and uncertainty.