Advanced Financial Management MBA Third Sem SPPU

Syllabus

Course Code: SC FIN- 01  

ADVANCED FINANCIAL MANAGEMENT

Unit 1: Corporate Restructuring & Corporate valuation: Background of Restructuring and Reorganization; Concept of Financial Distress; Financial Statements Including Funds Flow and Cash Flow Statements; Importance of Cash Flows; Economic Value Added (EVA): Meaning, Components, Advantages & Drawbacks, Calculating EVA.                                                                                                      (6+2)

Unit 2: Capital Structure and Firm Value: Assumptions and Definitions; Net Income Approach; Net Operating Income Approach; Traditional Position; Modigliani and Miller Position Taxation and Capital Structure; Trade-Off; Signalling Theory; PBIT - EPS Analysis; ROI - ROE Analysis; Leverage Ratios; Guidelines for Capital Structure Planning.                                                                                   (7+2)

Unit 3: Capital Budgeting: Comparison of Net Present Value, Internal Rate of Return, Profitability Index Method. Risk and Uncertainty - Sources of Risk, Reasons for Adjusting Risk in Capital Budgeting. Capital Rationing & Project Selection, Certainty Equivalent, Sensitivity Analysis and Scenario Analysis. Inflation and Real Discount Rate. Role of Qualitative Factors in the Project Selection.                               (5+2)

Unit 4: Working Capital Management: Determination of Level of Current Assets, Working Capital Financing by Banks; Cash and Liquidity Management- Aspects of Cash Management, Motives for Holding Cash and Marketable Securities, Cash Management Models, Strategies for Managing Surplus Funds; Credit Management: Objectives of Trade Credit, Credit Policies. Control and Collection of Accounts Receivables, Role of Factoring in Receivables Management (No Problems on Estimation of Working Capital).                     (9+2)

Unit 5: Dividend Policy and Firm Value: Why Firms Pay Dividends; Factors Influencing Dividend Policy; Legal and Procedural Aspects; Bonus Shares and Stock Splits; Share Buybacks and Valuation; Dividend Policies in Practice; Dividend Models: Walter’s model, Gordon’s Model, Modigliani and Miller’s Hypothesis; Models in Which Investment and Dividend Decisions are Related.                                         (8+2)