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Financial Management

Accountancy · Level 6  ·  9 Chapters

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What Financial Management covers

In this unit, you will be able to confidently navigate the world of finance by identifying and evaluating various sources of funding while adhering to regulatory standards. You will skillfully analyze financial institutions and select the best partners to support your organization's goals. With practical skills in calculating the present and future value of money, as well as managing risks and returns, you will be empowered to make sound financial decisions that drive success in any business setting.

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Careers after Financial Management

Understanding financial management isn’t just for bankers or accountants—it’s a skill that opens doors across Kenya’s vibrant economy. From Nairobi’s busy CBD to the heart of rural agribusiness, knowing how to source, evaluate, and manage finances is a game-changer for your career and business dreams.

  • Jua Kali Sector: Artisans and small traders need to access microfinance, SACCOs, or government youth funds. Your skills help you identify the best financing options, keep your business afloat, and grow sustainably.
  • Construction Sites: Contractors and suppliers often require loans or credit facilities from banks or development funds. Mastering financial evaluation ensures you choose the right partners and keep projects running smoothly.
  • Agribusiness & KTDA: Farmers and agripreneurs regularly interact with cooperatives, microfinance institutions, and government grants. Understanding financial institutions and their roles empowers you to expand your operations and maximize profits.
  • County Works & Public Projects: Project managers and procurement officers must evaluate funding sources and manage budgets according to county and national regulations, ensuring public money is used efficiently.
  • Matatu Industry: Owners and Saccos need to manage loans for fleet expansion and maintenance, requiring sharp financial management to avoid debt traps and ensure profitability.
  • Hospitality & Tourism: Entrepreneurs and managers in hotels and tour companies must analyze investment opportunities, select the right banks or investors, and project future cash flows for business growth.
  • Self-employment & Entrepreneurship: Whether you dream of starting a shop, tech start-up, or service business, these skills help you attract investors, manage cash flow, and make smart financial decisions for long-term success.

Mastering financial management today means you’ll be ready to seize opportunities, avoid costly mistakes, and build a secure, prosperous future—wherever your ambition takes you in Kenya!

Chapters

1
Identify financial sources
13 topics
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2
Evaluate financial markets and system
9 topics
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3
Determine time value of money
5 topics
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4
Analyse risk and return
6 topics
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5
Determine cost of capital
5 topics
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6
Manage working capital
9 topics
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7
Evaluate Capital Budgeting decisions
8 topics
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8
Formulate dividend decisions
11 topics
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9
Apply Islamic finance
6 topics
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What Financial Management covers: 50 main topics in 9 chapters

1. Identify financial sources

  1. 1.1 Nature and purpose of finance
  2. 1.2 Sources of finance

2. Evaluate financial markets and system

  1. 2.1 Roles of financial systems
  2. 2.2 Markets participants and financial innovation
  3. 2.3 Types of financial markets
  4. 2.4 Characteristics of a good market
  5. 2.5 Functions of financial markets
  6. 2.6 The flow of funds and the reports financial system
  7. 2.7 Organisation and structure of securities markets
  8. 2.8 Automation of securities exchanges; automated trading system (ATS), Central depository system(CDS)
  9. 2.9 Role of government in the financial system; capital markets authority, central bank, central depository and settlement company

3. Determine time value of money

  1. 3.1 Time value versus time preference for money
  2. 3.2 Relevance of time value of money
  3. 3.3 Discounting techniques
  4. 3.4 Compounding techniques
  5. 3.5 Preparation of loan reports amortisation schedule

4. Analyse risk and return

  1. 4.1 Meaning of terms
  2. 4.2 Components of risks and returns
  3. 4.3 Sources of risk
  4. 4.4 Measures of risk and return for a single asset
  5. 4.5 Distinction between risk-free and risky assets-CAPM & APT
  6. 4.6 Relationship between risk and return on investments

5. Determine cost of capital

  1. 5.1 Significance of cost of capital to firms
  2. 5.2 Factors influencing a firms cost of capital
  3. 5.3 Components costs of capital
  4. 5.4 Weighted average cost of capital reports
  5. 5.5 Marginal cost of capital

6. Manage working capital

  1. 6.1 Nature and importance of working capital
  2. 6.2 Determinants of working capital
  3. 6.3 Working capital operating cycle
  4. 6.4 Dangers of excessive / reports inadequate working capital
  5. 6.5 Working capital management policies
  6. 6.6 Cash management
  7. 6.7 Accounts receivable management
  8. 6.8 Accounts payable management
  9. 6.9 Inventory management

7. Evaluate Capital Budgeting decisions

  1. 7.1 Importance, characteristics and types of capital investment decisions
  2. 7.2 Difficulties of capital budgeting
  3. 7.3 Investment appraisal techniques

8. Formulate dividend decisions

  1. 8.1 Meaning of terms
  2. 8.2 Forms of dividends payment
  3. 8.3 Factors influencing dividend decisions of a firm
  4. 8.4 Dividend policies;
  5. 8.5 Dividend theories

9. Apply Islamic finance

  1. 9.1 Meaning of terms
  2. 9.2 Principles and trends in Islamic banking
  3. 9.3 Differences between Islamic and conventional banking
  4. 9.4 The concept of interest (riba) and how returns are made by reports Islamic financial securities
  5. 9.5 Sources of finance in Islamic financing: muhabaha, sukuk
  6. 9.6 Emerging issues

Revise this unit

Exam-style questions 126 Written to CDACC standard, with answers Test yourself 329 Multiple-choice, one at a time Practise questions 244 Quick recall — check you know the facts
3 more for this unit
Oral exam preparation 89 What the assessor asks, and how to answer out loud Worked calculations 35 Step-by-step maths with the common mistakes Quick cards 1,754 Myth busters, skill tips and scenarios

Beyond the syllabus

Decision simulator 9 On site, what would you do? Workplace scenarios 162 Real site situations — what would you do? Turn this into income 60 Where this skill earns — what to charge, how to find clients

Other units in Module V