INDUS BUSINESS ACADEMY II Trimester Financial Management

(Course outline) OBJECTIVES: 1. To understand the theories, concepts and techniques of financial management for prudent decision making. 2. To familiarize students on basic aspects of Finance Management & Corporate Finance 3. To enable the students to apply the knowledge for proper decision making. MODULE 1: 2 Hrs

Nature and Scope of Financial Management Distinction between Finance and Accounts - Objectives of Financial Management, profit maximization and wealth maximization. Finance Functions, Structure of finance department, and Emerging role of the Finance Managers. MODULE 2: 6 hrs (including application problems)

Time value of money Time Lines & notation, Future value of single cash flow & annuity, present value of single cash flow, annuity& perpetuity. Effective rate of return. (Problems and theory). Techniques of Financial Statement Analysis - Trend Analysis, Common Size Statements, Ratio Analysis: Classification of Ratios Liquidity Ratios, Leverage Ratios, Activity Ratios- And Profitability Ratios. MODULE 3: 9 hrs (including application problems)

Working Capital Management I: factors influencing working capital requirements. Current asset policy and current asset finance policy. Determination of operating cycle and cash cycle Management of cash and Marketable Estimation of working capital requirements of a firm - Securities receivables management

Inventory Management- working capital financing. (Relevant problems need to be covered under all heads) Working Capital Management II: Cash management, concept of float and managing float, preparation of cash budget. Working capital management in service sectors (Banking, insurance etc) MODULE 4: 6 hrs (including application problems)

Sources of Finance: Sources of Long Term & Short Term finance-Financing decisions: Cost of capital Hybrid Financing Instruments Lease financing - and hire purchase Venture Capital MODULE 5: 6 hrs (including application problems)

Capital Budgeting: Investment decisions - Investment evaluation techniques Nature and Significance - Techniques of Capital Budgeting - Pay Back Method Internal rate of return, Modified internal rate of return Accounting Rate of Return Net Present Value and profitability index. Estimation of cash flow for new project, replacement projects MODULE 6: 2 hrs

Capital structure decisions Planning the capital structure. (No Capital structure theories to be covered) Leverages Determination of operating leverage, financial leverage and total leverage. Cost of capital- Calculation of cost of equity, debt, debentures, preference shares, equity shares and retained earnings. Calculation of WACC, Marginal WACC. MODULE 7: 2 hrs

Dividend policy Management of Profits: Dividend policy - Determinants of dividend policy, bonus shares and stock splits - Factors affecting the dividend policy - dividend policies- stable dividend, stable payout. (No dividend theories to be covered). Corporate Restructuring

Text Books: I M Pandey - Financial Management, Vikas Publications, 9th Edition, 2005. References: 1. Prasanna Chandra - Financial Management, Tata McGraw-Hill, 6th Edition 2004. 2. M Y Khan and P K Jain - Financial Management, Tata McGraw-Hill, 5th Edition 2007 3. Brigham & Houston, Fundamentals of Financial Management, 10th Edition, Thomson 4. Damodaran, Ashwath, Corporate Finance, www.damodaran.com 5. Ravi Kishore. (2005).Financial Management (2ndEd.), New Delhi: Kitamahal publishers ON LINE RESOURCES www.icai.com www.economictimes.com www.ey.com News papers and Journals: 1. 2. 3. 4. 5. 6. 7. www.indiainfoline.com www.reportgallery.com www.deloitte.com

Indian Journal of Finance ICFAI Journal of Applied Finance Economic Times Business Line Business standard Finance India( Quarterly Journal of Indian Institute of Finance) Journal of Finance(The American Finance Association publication)

Evaluation Criteria: Mid-Term Exam-15% , End-Term Exam-25% In course Assessment-60% (Quizzes, test, assignments, presentations, class participation, etc)