Financial Management

Unit

Course Description

Sessions

I

Financial Management: Introduction to Financial Management, Objectives of Financial Management. Changing Role of Finance Managers in Contemporary Business Environment. Interface of Financial Management with other Functional Areas.

2

II

Sources of Financing: Shares, Equity Shares, Preference Shares Debentures, Term loans.

2

III

Time Value of Money: Future Value of Single Cash Flow & Annuity, Present Value of Single Cash Flow, Annuity & Perpetuity. Capital Recovery & Loan Amortization.

2

IV

Investment Decisions: Investment Evaluation Techniques-Net Present Value, Internal Rate of Return, Modified Internal Rate of Return, Profitability Index, Payback Period, Discounted Payback Period, Average Rate of Return Method Estimation of Cash Flow for New Project, Replacement Projects

4

V

Cost of Capital: Cost of Capital - Basic Concepts. Cost of Term Debenture Capital, Cost of Preference Capital, Cost of Equity Share Capital. Cost of Retained Earnings. Determination of Weighted Average Cost of Capital (WACC)

4

VI

Financial Decisions: Working Capital Management: Working Capital Determinants,

Current Assets Financing Policy. Determination of Operating Cycle. Estimation of Working Capital Requirements of a Firm: Operating Cycle Method and Net Assets Method. Leverage: Operating Leverage, Financial Leverage and Total Leverage.

4

VII

Capital Structure: Theory and Policy- Net Income Approach, Modigillani – Miller Approach, Modern Theories, Optimal Capital Structure, EBIT- EBT Analysis, Financial Break- Even.

3

VIII

Dividend Policy Decisions: Dividend Policy-Factors Affecting the Dividend Policy - Dividend Policies- Stable Dividend, Stable Payout. Dividend Theories: Walter, Gordon and MM Approach.

3

SECTION-B

At least one Case/Problems from each unit/ Questions will be case/inferences/application based.