Financial Management BNU MBA Second Sem

Syllabus

Course Code: MBA 2.4

Financial Management

Module 1: Introduction to Financial Management [10 Hours]

Concept of Financial Management - Meaning and Definitions, Scope of Financial Management, Finance Functions, Financial Goals of a Firm, Agency Problem, Emerging Role of Finance Manager in Indian Business Scenario. Financial Decisions-Types of Financial Decisions, Financial Planning – Principles of Sound Financial Planning, Steps in Financial Planning, Factors Influencing a Sound Financial Plan.

Module 2: Time Value of Money [08 Hours]

Compounding, Continuous Compounding, Effective Rate of Interest, Discounting – Single Cash Flows & Series of Cash Flows, Annuity – Future Value and Present Value, Present Value of Growing Annuity, Perpetuity, Rule of 69, Rule of 72, Doubling Period, Equated Annual Installments.

Practical Exercise/Software Practice:

Spreadsheet Calculations: PV, FV, Rate, Rule of 69, Rule of 72, Doubling Period and EMI etc. Using Excel.

Module 3: Capital Structure Decisions [12 Hours]

Sources of Funds: Short Term Sources, Long Term Sources, Factors Influencing Capital Structure, Benefit to Owners – EBIT – EPS Analysis, Point of Indifference, Financial Break-even Point,

Cost of Capital- Methods of Computing cost of Capital: Cost of Equity Capital, Cost of Preferred Capital, Cost of Debt Capital, Cost of Internally Generated Funds, Weighted Average Cost of Capital (Theory and Problems) Leverages-Types and Problems.

Practical Exercise/Software Practice:

Spreadsheet Calculations: Calculation of EBIT-EPS Analysis, BEP, Leverages, Calculating Cost of Equity, Preferred Stock, Debt Using Excel.

Module 4: Investment Decisions and Dividend Decisions [18 Hours]

Meaning of Capital Budgeting, Significance, Principles, Capital Budgeting Proposals, Methods of Appraising Proposals; Payback Period, ARR, IRR,NPV, Profitability Index, Utility Method, EVA Method, APV Method, and Capital Rationing.

Dividend: Meaning, Theory of Relevance and Theory of Irrelevance, Walter’s Model, Gordon’s Model (Theory and Problems) Types of Dividends, Bonus Shares, Stock Splits.

Practical Exercise/Software Practice:

Spreadsheet Calculations: Calculation of PB, ARR, NPV, IRR Using Excel.

Module 5: Working Capital Management [08 Hours]

Concept of Working Capital, Factors Determining Working Capital, Sources of Working Capital, Estimating Working Capital Needs, Managing Cash, Marketable Securities, Debtors and Inventory (Problems on WCM).

Practical Exercise/Software Practice: Preparation of Statement of Working Capital Using Excel.