Financial Management

The Financial Management module, part of the ICAG Professional Qualification Syllabus for 2024–2029 at the Application Level (module 2.4), equips candidates with essential knowledge and skills in financial planning, investment appraisal, risk management, business financing, and value creation. It prepares learners to evaluate financial decisions, manage working capital, assess capital structure, and understand capital markets. The module emphasizes practical financial techniques for both private and public sector decision-making.

Module Aim

The aim of this module is to ensure candidates develop a solid understanding of financial management principles, tools, and techniques used to support long-term and short-term financial decisions. It reinforces the ability to analyze financial strategies, assess investment opportunities, manage business risks, and recommend financing options that enhance organizational value in both public and private sector institutions.

Core Content Areas

The curriculum is structured around key competencies, with indicative weightings that guide learning and reflect the exam focus:

Financial Management Environment (10%)

• Explains the objectives of financial management, including profit maximization and shareholder wealth maximization.

• Discusses the roles of finance managers in various organizational settings.

• Considers the functions of financial markets and institutions, including the Ghanaian capital market.

• Identifies the impact of economic variables (inflation, interest rates, exchange rates) on financial decisions.

Working Capital Management (20%)

• Explains components of working capital and their importance in liquidity and profitability management.

• Uses techniques for managing inventories, receivables, payables, and cash.

• Applies working capital models (e.g., Baumol, Miller–Orr) to optimize cash management.

• Identifies strategies for managing working capital in the private and public sectors.

• Assesses working capital policies and their implications for risk and return.

Investment Appraisal and Capital Investment Decisions (25%)

• Applies investment appraisal techniques (NPV, IRR, PI, Payback, Discounted Payback) for evaluating long-term projects.

• Considers risk and uncertainty using sensitivity analysis, scenario analysis, and probability-based approaches.

• Evaluates capital budgeting decisions under inflation, taxation, and working capital adjustments.

• Discusses public sector investment decision-making using cost-benefit analysis.

• Distinguishes between mutually exclusive and independent projects.

Business Finance and Capital Structure (20%)

• Explains sources of finance for private and public entities (equity, debt, retained earnings, grants, public sector funding).

• Assesses the cost of equity, cost of debt, WACC, and gearing levels.

• Evaluates capital structure theories (tradition, Modigliani–Miller, pecking order).

• Recommends appropriate financing strategies based on organizational goals and risk appetite.

• Discusses dividend policy theories and their relevance.

Valuation of Business and Financial Securities (15%)

• Determines the value of debt, equity, and hybrid securities using appropriate valuation models.

• Applies share valuation techniques (dividend models, P/E ratios, free cash flow).

• Valuates businesses for mergers, acquisitions, restructuring, or privatization.

• Assesses intrinsic vs. market-based valuation approaches.

• Considers limitations and assumptions underlying valuation models.

Risk Management (10%)

• Identifies financial risks (market, credit, liquidity, exchange rate, interest rate).

• Explains risk management strategies and the role of risk frameworks.

• Describes derivatives and hedging techniques (forwards, futures, options, swaps).

• Examines risk management in the public sector, including governance and control structures.

• Considers ethical issues in risk management decisions.

Ethical considerations are integrated throughout the module, requiring candidates to apply responsibility, transparency, and professional judgment in evaluating financial decisions, managing risk, and recommending financing strategies across both private and public sector contexts.