Business Finance notes – KNEC Diploma

This unit or subject is examined by KNEC on those taking the following courses:

• Diploma in Supply Chain Management – Module 1

The topics that need to be covered as required by KNEC in this unit/subject are as follows:

BUSINESS FINANCE

Introduction

This module unit is intended to equip the trainee with knowledge, skills and attitudes that will enable him/her to identify the sources c: finance, manage and apply business finance in a business set up.




General Objectives

At the end of this module unit the trainee should be able to:

• Discuss the types of business organisations
• Identify various the sources of finance and their usefulness in managing a business
• Explain the role of financial institutions in business management:
• Discuss financial decisions in managing business assets
• Apply basic financial models in assessing viable investment projects for a business.

 

Module Unit Summary

Topic 1: Nature of Business Finance

• Meaning of business finance
• Nature and scope
• Importance of business finance
• Relationship with other disciplines

Topic 2: Sources of Finance

• Sources of business finance
• Criteria used to choose sources of finance
• Methods used to raise finance

Topic 3: Cost of Finance

• Definition of finance
• Importance of cost of finance
• Components of cost of finance
• Specific cost of finance Weighted average cost of Capital

Topic 4: Financial Institutions in Kenya

• Financial institution in Kenya
• Functions
• Role of financial institutions
• Factors that have leading to rapid growth of financial institutions
• Factors leading to failure of indigenous financial institutions

Topic 5: Working Capital Management

• Definition of working capital management
• Types of working capital management
• Calculation of working capital management
• Sources of financing
• Mechanisms of controlling working capital

Topic 6: Time Value of Money

• Definition of time value of money
• Importance of time value of money
• Future value of money
• Present future value of money
• Loan amortization

Topic 7: Investment

• Appraisal
• Techniques
• Meaning of Investment Appraisal Techniques
• Importance Appraisal Techniques
• Limitations of Investment Appraisal Technique

Topic 8: Ratio Analysis

• Ratio analysis
• Types of ratio
• Limitations of ratio analysis

Topic 9: Emerging Trends and Issues in Business Finance            

• Emerging trends and issues in business finance
• Challenges posed by emerging trends and issues in business finance
• Coping with challenges posed by emerging trends and issues in business finance