Introduction
This module is intended to provide the trainee with knowledge, skills, attitudes and techniques in financial management to enable him/her manage finance in supply chain management.
A trainee who completes this module should be able to: Explain the role of financial management in supply chain management, Analyse the sources of finance for organizations, Discuss the roles and operations of financial markets, Determine the time value of money, Apply budgeting and budgetary control concepts and techniques in supply chain management function, Analyse various investments projects using various capital investments appraisals methods and make appropriate decisions, Explain the significance of working capital management, Compute the various financial ratios and use the findings to evaluate suppliers and Analyse various types of risks encountered in supply chain and options of mitigating financial risks
Click here to download Preview study notes for Finance for Procurement
CPSP-K notes in Kenya-click to Download
PL1.6.01 Overview of finance for procurement
Competence
The trainee should have the ability to relate financial management techniques to supply chain management
Content
Theory
- Definitions of terms used in financial management in relation to supply chain
- Linkage between financial management and supply chain management
- Roles of financial management in supply chain
- Agency problem
- Corporate governance
Practice
- Review management reports
PL1.6.02 Sources of finance
Competence
The trainee should have the ability to identify various sources of finance and explain why one source finance may be ideal for a particular firm at a given time
Content
Theory
- Short term sources
- Commercial paper
- Bank overdrafts
- Loans
- Promissory notes
- Treasury bills
- Bill of exchange
- Letter of credit
- Hire purchase
- Long term sources
- Equity
- Rights issues
- Bonus issues
- Bonds/ debentures
- Notes payable
- Lease or buy decision
- Venture capital
- Syndicate loan
- Criterial used to choose sources of finance
- Methods used to raise finance
- Determinant of cost of capital
- Components of costs of capital
Practise
- Compare the various source of finance to determine viability
- Compute components of costs of capital
PL1.6.03 Cost of capital
Competence
The trainee should have the ability to calculate cost of finance.
Content
Theory
- Cost of capital concept
- Importance of cost of finance
- Components of cost of finance
- Cost of debts
- Cost of equity
- Weighted average cost capital(WACC)
- Weighted average cost of capital(WACC)
Practise
- Calculating the cost of finance
PL1.6.04 Financial markets
Competence
The trainee should have the ability to differentiate the various types of financial markets
Content
Theory
- Money markets
- Commercial papers
- Commercial banks
- Capital markets
- Non-banking financial institutions
- SACCOs
- Microfinance institutions
Practise
- Determination of financial market drivers
- Select financing option
PL1.6.05 Time value of money
Competence
The trainee should have the ability to compute time value of money
Content
Theory
- Definition of time value of money
- Importance of time value of money
- Future value of money and present value of money
- Amortizing a loan
Practice
- Computation of future value of money and present value of money
- Preparation of loan amortizing schedule
PL1.6.06 Budgeting and budgetary control
Competence
The trainee should have the ability to contribute to budgeting process in an organization from a procurement and supply chain management perspective.
Content
Theory
- Definition of budgeting and budgetary control
- The relationship between functional budget and master budget
Practise
- Preparation of budgets
PL1.6.07 Capital expenditures decisions
Competence
the trainee should have the ability to analyse various investments projects using various caital investments appraisal methods and make appropriate decisions.
Content
Theory
- Nature of capital expenditure decisions.
- Non-discounting techniques
- Accounting rate of return
- Pay-back period
- Benefits and limitations of each technique
- Discounted cash flow techniques
- Net present value
- Profitability index
- Internal rate of return
- Benefits and limitations of each technique
Practise
- Choice of project using non-discounted and discounted cash flow techniques
Click here to download Preview study notes for Finance for Procurement
PL1.6.08 Working capital management
Competence
The trainee should have the ability to manage working capital.
Content
Theory
- Definition of working capital management
- Components of working capital
- Sources of financing working capital
- Mechanisms of controlling working capital
- Inventory management method
- Stock levels
- Economic order quantity(EOQ)
- Discounts/price breaks
- Debtors management
- Working capital cycle
Practise
- Preparation of cash budget
- Compute working capital of a firm
PL1.6.09 Financial statement analysis
Competence
The trainee should have the ability to compute various financial ratios and use the findings to evaluate suppliers.
Content
Theory
- Definition of financial statements
- Definition of ratio analysis
- Liquidity ratios
- Profitability ratios
- Activity/efficiency ratios
- Solvency ratios
- Investments ratios
- Steps in financial ratio analysis
- Using financial rations to access a supplier
- Importance and limitation of ratio analysis
- Suppliers financial statements
Practise
- Calculation of ratios
- Application of ratios to make business decisions
- Preparation of proforma income statements
PL1.6.010 International finance
Competence
The trainee should have the ability to address challenges in international finance.
Content
Theory
- Definition of key terms in international finance
- Importance of international finance
- Challenges/risks encountered in international finance
- Foreign exchange market
- Various options of mitigating financial risks in international finance
Practice
- Computation of various options of mitigating financial risk in international supply chain
PL1.6.011 Emerging issues and trends in finance for procurement
Competence
The trainee should have the ability to identify various emerging issues and trends in the area of finance for procurement.
Content
Theory
- Identifying emerging issues and trends in finance for procurement
- Identifying challenges and opportunities posed by the emerging issues and trends in finance for procurement
- Method of coping with and adapting to the emerging and trends in finance for procurement
Practise
- Discussion of challenges and opportunities posed by issues and trends in finance for procurement.
Click here to download Preview study notes for Finance for Procurement
CPSP-K notes in Kenya-click to Download
https://www.someakenya.com/download/cpsp-k-past-papers-free-download/
