BRAC Business School

Program: Executive Master of Business Administration (EMBA)

Trimester: Summer 2018
Course: FIN 731 Working Capital Management & Short-Term Financing
Credit Hour: 3.00
Prerequisite: FIN 701
Course Instructor: Class Time:
Mohammed Sohail Mustafa CFA Thursday- 06:30 P.M. – 09:30 P.M.
Associate Professor Room: UB 20702
Bangladesh Institute of Bank Management
Contact: mustafa@bibm.org.bd

Course Description

Although finance managers spend a significant amount of time (close to 50%, according to some studies)
on problems related to short-term finance, short-term or working capital management is only taught as
a chapter or a section in most Financial Management or Corporate Finance courses. This course,
however, is entirely devoted to working capital management. We will study the different components
of working capital (cash, receivables, payables, inventory, etc.), and how to manage them so as
to maximize shareholder wealth. The principles and concepts of finance theory will be applied
to problems and decisions associated with working capital. We will focus on the optimal (or
value-maximizing) use of working capital. This course includes theoretical and applied components.
Practical applications are useful, but cannot be studied fruitfully without a sound knowledge of the
underlying theory. Hence there will be considerable emphasis on the theory. Numerical examples will
be very important in illustrating the concepts and applications to be covered in this course. The format
will be predominantly lecture-oriented, supplemented by a set of cases.

Learning Outcomes

 Evaluate comparative working capital management policies and their impact on the firm's
profitability, liquidity, risk and operating flexibility.
 Evaluate the importance of effective working capital management and its role in meeting the firm's
strategic objectives and its impact in value creation.
 Investigate funds flow cycles and their impact on working capital management objectives.
 Plan analytical skills, tools and techniques to enhance the decision-making process.
 Plan analytical skills, tools and techniques to enhance the decision-making process.
 Compare and contrast the relative merits of alternative working capital policies and the likely short-
term and long-term impact on the firm.
 Formulate appropriate working capital management policies to achieve corporate objectives.
 Apply corporate cash management, accounts receivable management, bank relations, and inventory
management techniques to maximize the share holders' value.
 Write a plan for a balanced integration of cash, credit and other short-term topics and policies.
 Formulate and integrate an extended treatment on international working capital topics.

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Course Materials

Instructor will provide required course materials at the beginning of the course and students are
strongly advised to bring those in the class. Since, this course is almost quantitative in nature, students
are also instructed to bring scientific calculator in the class.

Suggested Readings

 Short-Term Financial Management, 3rd Edition, Terry S. Maness and John T. Zietlow, Thomson
South-Western, ISBN 0324202938.
 Working Capital Management by Hrishikes Bhattacharya, PHI publication.
 Working Capital Management by R.P. Rustagi, Taxman Publication.
 Financial Management by Prasanna Chandra, McGraw Publications.
 Financial Management by I.M. Pandey, Vikas Publishing House.

Project

All students will be required to submit a Research paper. This paper must be typed/word processed.
The length of the paper should be 50-70 pages. The submission date of this paper will be announced in
the class. The Research Paper will account for 10% of your total grade for this course. Grammar &
spelling will be counted. All students will be required to research an aspect of International Economic
thought. Each student will conduct a written interpretation & analysis of current International
economic problem. All papers will include a comprehensive bibliography. Footnotes are to be used if
you are using the direct reference to author’s work. Research topics will be discussed & assigned in the
class. Project topics will be given in the class & outlines will be discussed.

Teaching Methodology

Lecture, Exercise, Case Study, Presentation, Interactive Discussion on WCM issues of different
organizations.

Examinations

There will be one midterm examination & a final examination as per BRACU policy. At the end of every
two chapters, there will a Quiz conducted in the beginning of the following lecture. The duration of
the quiz will be 10 minutes for 10 MCQs. The structure of the questions of the midterm & final will be
discussed in the class.

Base of Evaluation

Mid Term 20%

Final Examination 40%
Project & Assignments 10%
Case Study & Presentation 10%
Attendance 10%
Quizzes 10%
Total 100%
Grade as per BRACU Policy
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Course Contents

Chapters Contents

1 Introduction to Working Capital Management

2 Management of Cash & Marketable Securities
3 Management of Accounts Receivable & Inventory
4 Short-Term Financing
5 Analysis of Solvency, Liquidity & Financial Flexibility
6 Credit Policy & Collection
Mid Term Examination
7 Managing Payables & Accruals
8 The Payment Systems & Financial Institutions Relationships
9 Financial Forecasting, Planning & Budgeting
10 The Money Market
11 Cash Flow Forecasting
12 Managing Multinational Cash flow
Final Examination

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