FINANCIAL MANAGEMENT

Paper Code: 
BCP 313
Credits: 
6
Contact Hours: 
90.00
Max. Marks: 
100.00
Objective: 

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies

CO 84:Appraise the financial management concepts and tools to the decisions faced by a manager in investment decisions.        

CO 85: Compute the cost of debt, cost of equity and the Cost of Capital

CO 86:Appraise the risk profile of firms; specifically, estimate the costs of capital, including debt and equity capital using financial data

CO 87:Analyze capital budgeting problems using different techniques, including net present value, internal rate of return and modified internal rate of return

CO 88:Demonstrate the importance of working capital management and the tools to manage it

CO 89:Explore the financial environment in which firms and managers must operate

Interactive Lectures, Discussion, Tutorials, assignments.

Self-learning assignments, Effective questions, Giving tasks,

 

Class test, Semester end examinations, Quiz, Solving problems in tutorials, Assignments, Individual projects

 

18.00
Unit I: 
  • Introduction to Financial Management Function

Objective and scope of financial management, Profit Maximisation, Wealth  Maximisation  and Value  Creation, RoleofFinancialManagerandFinancialController,Financialmanagementenvironment, Functionsoffinanceexecutivesinanorganization,Financialdistressandinsolvency

  • Financial Analysis through Ratios
  • Users of the financial analysis b) Sources of financial data for analysis c) Calculation and Interpretation of ratios: - Analysing liquidity - Analysing leverage - Analysing solvency - Analysing efficiency/ activity - Analysing profitability d) Limitations of ratio analysis

 

18.00
Unit II: 
  • Financing Decisions: Sources of Finance a) Different Sources of Finance, Characteristics of different types of long-term debt and equity finance, Method of raising long b) Different Sources of short-term Finance c) Internal fund as a source of finance d) International sources of finance e) Other sources of finance- Sale and lease back, Convertible debt, Venture capital, Grants etc.
  • Cost of Capital a) Significance of cost of capital b) Factors of cost of capital c) Measurement of costs of individual components of capital d) Weighted average cost of capital (WACC) e) Marginal cost of capital
  • Capital Structure Decisions a) Significance of capital structure b) Determinants of capital structure c) Capital structure planning and designing d) Designing of optimum capital structure e) Theories of Capital Structure and value of the firm- relevancy and Irrelevancy of capital structure. f) EBIT- EPS Analysis, Breakeven- EBIT Analysis. g) Under/ Over Capitalization

 

18.00
Unit III: 
  • Leverages: Types of Leverages- Operating, Financial and Combined, Analysis of leverages
  • Capital Investment Decisions a) Objectives of capital investment decisions b) Methods of Investment appraisal: Payback period, Discounted payback period - Accounting Rate of Return (ARR), - Net Present Value (NPV) - The meaning of NPV, Strengths and limitations of NPV method, The working capital adjustment in an NPV analysis, Capital rationing, Equivalent Annual Costs, - Internal Rate of return (IRR) - Limitations of the IRR method, Multiple IRRs, - Modified internal Rate of Return (MIRR) - Definition and explanation of MIRR, The process for calculating MIRR, Strengths of the MIRR approach. - Profitability Index

 

18.00
Unit IV: 
  • Dividend Decisions a) Basics of Dividends b) Forms of dividend c) Determinants of dividend d) Relevancy and Irrelevancy of Dividend Policies- Traditional Approach, Walter’s model, Gordon’s model, Modigliani and Miller (MM) Hypothesis.

 

18.00
Unit V: 
  • Management of Working Capital: The management of working capital- Liquidity and Profitability b) The Working capital financing decisions- Primary and Secondary Sources of Liquidity c) The working Capital Cycle (operating Cycle), Effectiveness of Working Capital based on its operating and cash conversion cycles d) Assessment of working capital requirement e) Management of Accounts Receivables (Debtors) f) Factoring and Forfeiting g) Management of Accounts Payables (Creditors) h) Management of Inventory i) Management of Cash, Treasury management j) Banking norms of working capital finance

 

Essential Readings: 

Study Material Published d by Institute of Chartered Accountants of India

References: 

• Pandey, I.M., “Financial Management”, Vikas Publications
• Rustagi, “Fundamentals of Financial Management”, (Galgotia Publishing House, Delhi)
• Khan M.Y- Indian Financial Management, Tata Mc Graw Hill, India
• Arun Kumar Scanner ,SuchitraPrakashan(P) Ltd

E-RESOURCES:
https://www.icai.org/post.html?post_id=17776

JOURNALS:
The Chartered Accountant Journal /ICAI Student Journal

Academic Year: 
2023-2024
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