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Financial Management (Theory)
This course will enable the students to develop an insight in the field of financial management so as to equip the student with basic knowledge required for financial decision making.
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Course |
Learning outcome (at course level) |
Learning and teaching strategies |
Assessment Strategies |
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Course Code |
Course title |
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24MTM225 |
Financial Management (Theory) |
CO80: Explore significance of the financial management function and role of a CFO within a business, classify various sources of finance and analyze financial problems using discounting and compounding techniques. CO81: Analyze risk-return associated with a security or a portfolio and explain Cash and Marketable Securities Management CO82: Estimate working capital requirements of a firm, explain Receivables Management and apply techniques of Inventory Management. CO83: Estimate Cost of Capital of a firm and evaluate an investment proposal using Capital Budgeting techniques. CO84: Analyze Leverage, Capital Structure and Dividend policy of a company. CO85: Contribute effectively in course- specific interaction |
Approach in teaching: Interactive Lectures, Group Discussion, Tutorials, Case Study
Learning activities for the students: Self-learning assignments, presentations |
Continuous Assessment Test, Semester end examinations, Quiz, Assignments, Presentation |
Introduction to Financial management
Introduction-Meaning, Nature, Scope, Importance and Objectives of Financial Management, Functions of a chief financial officer; Sources of finance- Long term and Short term; Indian financial system-structure and functions.
Time value of Money-Compounding and Discounting concept and its applications
Risk and Return & Cash and Marketable securities management
Risk and Return-Risk of a single asset, portfolio theory and risk diversification, Systematic and unsystematic risk, Capital Asset pricing model (CAPM)- Assumptions, CAPM equation, Security Market line (SML)
Cash and Marketable securities management- Meaning and Principles of cash management;
Working capital Management, Receivables and Inventory Management
Management of working capital-Meaning, Estimation of working capital requirements, Working capital financing by banks, Receivables management- Meaning and importance;Inventory management- Meaning, objectives and techniques-Economic order quantity, Re-order point, Fixing stock levels
Cost of Capital and Capital Budgeting
Cost of Capital- Meaning, Cost of Debt, Preference and Equity Capital, Weighted average cost of capital;
Capital Budgeting- Concept, need and objectives; Methods of Capital budgeting – Average Rate of Return, Payback period, Net present value, Internal Rate of Return, Profitability Index.
Leverage, Capital Structure and Dividend Policy
Leverage-Meaning, types of leverages and their significance
Capital Structure-Meaning, considerations in capital structure planning
Dividend Policy- Meaning, Factors affecting dividend decisions, Alternative forms of dividends, Types of dividend policies, Dividend policy models-Assumptions and criticism
*Case studies related to entire topics are to be taught.
- Chandra Prassana, Financial Management, Tata McGraw Hill, 9th Edition
- Vyuptkesh Sharan, Fundamentals of Financial Management, Pearson, Third Edition
Suggested Readings:
- Brigham Houston, Fundamentals of Financial Management, Cengage Learning, Thirteenth Edition
- I M Pandey “Financial Management”, Vikas Publications
- Khan & Jain, “Financial Management”. Tata McGraw Hill, 7e
- Rustagi R.P, Fundamentals of Financial Management, Taxmann
- Van Horne, Financial Management, PHI
E-Resources:
- Theory & Problems in financial management, 2/e Khan & Jain, https://www.expresslibrary.mheducation.com/bookshelf
- Cases in Financial Management, Pandey, Ramesh Bhat, https://www.expresslibrary.mheducation.com/bookshelf
Journals:
- International Journal of Financial Management
- IUP Journal of Applied Finance
