Financial Management

Paper Code: 
24BCP313
Credits: 
06
Contact Hours: 
90.00
Max. Marks: 
100.00
Objective: 

This course will enable the students to develop an understanding of various aspects of Financial Management and acquire the ability to apply such knowledge in decision-making and to understand various finance functions like financing decision, investment decision, dividend decision and develop an understanding of working capital management and its component.

 

Course Outcomes: 

Course

Learning outcome

(at course level)

Learning and teaching strategies

Assessment Strategies

Course Code

Course

Title

24BCP313

Financial Management

(Theory)

 

CO 1Appraise the financial management concepts and do financial analysis through ratios.

CO 2Identify various sources of finance Compute Cost of Capital of an organization and Design optimum capital structure of an organization by using capital structure theories.

CO 3Determine dividend and gain knowledge of leverage in capital structure of an organization.

CO 4Decide capital investment decisions through analysis of various methods of investment appraisal.

CO 5Demonstrate the importance of workingcapital management and gain knowledge of tools to manage working capital.

CO 6Contribute effectively in course specific interaction.

Approach in teaching:

Interactive Lectures, Discussions, Tutorials, Problem solving sessions, Presentations

 

Learning activities for the students:
Self-learning assignments, Case Study Analysis, Presentations, Group Discussions

 

Continuous Assessment Test, Semester End Examinations, Quiz, Solving Numerical Problems, Assignments, Class Presentations, Individual and group projects.

 

18.00
Unit I: 
Financial Management and Analysis

• Introduction to Financial Management Function: Objective and scope of financial management, Profit Maximisation, Wealth Maximisation and Value Creation, Role of Financial Manager and Financial Controller, Financial management environment, Functions of finance executives in an organization, financial distress and insolvency.
• Financial Analysis through Ratios: Users of the financial analysis, Sources of financial data for analysis, Calculation and Interpretation of ratios, Limitations of ratio analysis.

18.00
Unit II: 
Sources of Finance , Capital Structure and Cost of capital
  • Sources of Finance: Different Sources of Finance, Characteristics of different types of long-term debt and equity finance, Method of raising long term finance, Different Sources of short-term Finance, Contemporary sources of funding- P2P lending, Equity funding, Crowd funding, Start-up funding, etc, Internal fund as a source of finance, International sources of finance, Other sources of finance- Lease Financing, Sale and lease back, Convertible debt, Venture capital, Grants etc.
  • Cost of Capital: Significance of cost of capital, Factors of cost of capital, Measurement of costs of individual components of capital, weighted average cost of capital (WACC), Marginal cost of capital.
  • Capital Structure Decisions: Significance of capital structure, Determinants of capital structure, Capital structure planning and designing, Designing of optimum capital structure, Theories of Capital Structure and value of the firm-relevancy and Irrelevancy of capital structure, EBIT- EPS Analysis, Breakeven- EBIT Analysis, Under/ Over Capitalisation.

 

18.00
Unit III: 
Leverages and Dividend Decisions
  • Leverages: Types of Leverages- Operating, Financial and Combined, Analysis of leverages.
  • Dividend Decisions: Basics of Dividends, Cash dividend, stock dividend/ bonus share, stock-splits, share buyback, Determinants of dividend, Relevancy and Irrelevancy of Dividend Policies- Traditional Approach, Walter’s model, Gordon’s model, Modigliani and Miller (MM) Hypothesis.

 

18.00
Unit IV: 
Capital Investment Decisions
  • Capital Investment Decisions: Objective of capital investment decisions. 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 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, Process for calculating MIRR, Strengths of the MIRR approach. - Profitability Index.

 

18.00
Unit V: 
Management of Working Capital
  • Management of Working Capital: The management of working capital- Liquidity and Profitability, The Working capital financing decisions-Primary and Secondary Sources of Liquidity, The Working Capital Cycle (Operating Cycle), Effectiveness of Working Capital based on its operating and cash conversion cycles, Assessment of working capital requirement, Management of Accounts Receivables (Debtors), Factoring and Forfaiting, Credit Management: - Credit granting. - Monitoring accounts receivables. - Debt collection, Management of Accounts Payables (Creditors), Management of Cash, Treasury management, banking norms of working capital finance.

 

Essential Readings: 
  • Study Material Published d by Institute of Chartered Accountants of India

 

References: 

SUGGESTED READINGS:

  • 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:

 

 

JOURNALS:

  • The Chartered Accountant Journal /ICAI Student Journal

 

Academic Year: 
2024-2025
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