Certificates ( OTHM )
Cost of Capital
Capital structure refers to the way an organisation finances its assets through a combination of equity, debt or hybrid instruments. The cost of capital is the opportunity cost of an investment.
In other words, cost of capital is the rate of return that a company would earn by investing in another project with the same level of risk as the investment that has already been selected.
- Cost of equity
- Cost of debt
- Weighted Average Cost of Capital
- Marginal cost of capital
Standard Costing and Variances
Standard costing and the related variances are valuable management tools. The theory discussed will help individualssuch as management accountants, accounts executives,senior managers and anyone requiring a thorough knowledge on standard costing.
A standard is a predetermined estimation per unit that is used for future periods. A costing system based on costs derived from standards is known as standard costing. It is a control technique that compares standard costs and revenues with actual results to obtain variances used to stimulate improved performance.
- Material and labour variance analysis
- Variable and fixed production cost variance analysis
- Sales variance and variance reconciliation
- Performance evaluation using standard costing
- Interpretation and investigation of variances
- Standard Costing in Modern Business
The value of a businessisthe key factor in most business decisions. It tells you exactly where your business is and presents a proper picture of the financial health of your company. Business valuation is often performed with a view of selling or buying a business.
- Intellectual Capital Valuation
- Asset based valuation
- Earnings based valuation
- Dividend based valuation
- Cash based valuation method
The various investment appraisal techniques discussed can be used to conduct capital budgeting exercises. Capital budgeting helps to address two main issues in any organisation, which are the amount of capital that should be invested on a project and to decide the project from a multiple number of projects we have in hand.
The theory discussed will help individuals such as, senior managers, management accountants, executives and any individual who requires a thorough knowledge on investment appraisal techniques and capital budgeting.
Investment is a long-term commitment to generate a higher return in the future. Organisations invest in new projects with the aim of starting new businesses, replacing existing assets, expanding the operational capacity and diversifying into a new market.
- Accounting Rate of Return (ARR)
- Payback Period
- Discounted Payback Period
- Net Present Value
- Internal Rate of Return
- Modified Internal Rate of Return
- Multiple IRR
Management accounting deals with identification, measurement, accumulation, analysis, and preparation of information. Used by management to plan, evaluate and control an entity. This area looks at the measurement and identification of costs, which plays a major role in determining the profit level of any company.
Costing is a fundamental basis that helps determine the level of profit of an organisation. Therefore needs to manage effectively. Many types of costs are considered when some specific management decisions taken. Managers require information at various levels such as the planning, control and for the decision making. Therefore having access to accurate and reliable information for better management is highly important.
- What is a cost?
- Break Even and Cost-Volume-Profit analysis
- Overhead allocation and apportionment
- Activity Based Costing (ABC)
- Costs and decision making
Budgets fulfil the multifunctional needs of an organisation. They can be considered as a tool to manage an organisation planning annual operations, controlling activities, communication plans to the various responsibility managers and in the co-ordination of the activities of the various parts of the organisations
Budgets ensure that all the parts of a function are in harmony with each other. They also help to motivate managers to strive to achieve the organisational goals and performance evaluation of managers.
- Approaches to budgeting
- Types of budgets
- Forecasting and planning for budgets
- Modern approaches for budgetary planning
- Budgetary control