Course

Unit 1

Financial management: Meaning and definition – Importance –Scope– Objectives- Functions of financial management – Finance manager – Functions and role of finance manager – Time Value of Money- concept of risk and return.

Unit 2

Investment Decision: Capital budgeting process – Estimation of relevant cash flows -Payback Period method – Accounting Rate of Return – Net Present Value – Net Terminal Value – Internal Rate of Return – Profitability Index – Capital budgeting under risk -Certainty Equivalent Approach and Risk Adjusted Discount Rate.

Unit 3

Financing Decision –Sources of Finance – Cost of capital – cost of debt – cost of preference capital

– cost of equity – cost of retained earnings – composite cost of capital – Capital structure –

meaning – Optimal Capital Structure- factors determining capital structure – Capital Structure

Theories – Net Income Approach, NOI, MM theory – types of Leverage – operating leverage, financial leverage, combined Leverage.

Unit 4

Dividend- Types of Dividend Policies – Factors determining dividend – Theories of Dividend Policies

–Walter’s Model, Gordon and MM -. Stock Splits – Stock repurchases

Unit 5

Management of Working Capital – Meaning, Concept, types, and determinants – Estimation of working capital requirements – Working Capital Cycle – Management of Cash – Receivables management- Inventory management.

Course Objective:

This course aims to equip students with a comprehensive understanding of financial management, including the significance, scope, objectives, and functions of finance, capital budgeting techniques, financing decisions, dividend policies, working capital management, and critique of credit rating agencies in India.

Course Outcomes:

The student will be able to:

CO1: Understand financial management’s significance, scope, objectives, and functions, including the role of finance managers, time value of money, and risk-return concepts for effective decision-making.

CO2: Analyze investment opportunities using various capital budgeting techniques, considering cash flows, and risk, and applying appropriate methods to maximize shareholder value.

CO3: Understand financing decisions by exploring sources of finance, cost of capital components, optimal capital structure determinants, and leverage

CO4: Understand types of dividend policies, factors influencing dividends, and theories such as Walter’s, Gordon’s, and MM’s models, alongside stock splits and repurchases in corporate finance.

CO5: Understand working capital management, its types and determinants, assess requirements, optimize the working capital cycle, and implement strategies for effective cash, receivables, and inventory management.

Text Book:

1. R. M. Srivastava – Financial Management – Oxford University Press.

References:

1. Shashi Gupta, R. K. Sharma – Financial Management Theory and Practice – Kalyani Publishers
2. IM Pandey – Essentials of Financial Management – Vikas Publishing
3. C. Tulsian – Financial Management – S. Chand
4. Prasanna Chandra – Fundamentals of Financial Management – TMH
5. C. Kuchhal – Financial management: An Analytical and Conceptual Approach – Vikas Publishing House.