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Financial Management (Theory)
This course will enable the students to develop the understanding of financial management concepts and capitalization decisions. It also develops an understanding and sound knowledge among students about the adequate capital structure of an organization and identifying various sources of finances.
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Course Code |
Course Title |
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24CBTM403 |
Financial Management (Theory)
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CO151: Appraise the area of financial management, its scope and the concept of over capitalization and under capitalization. CO152: Explain short term and long term sources of finance and calculate the required fund of working capital. CO153: Analyze capital structure, leverage and dividend decisions. CO154: Analyze capital budgeting techniques and explain the concept of cash management. CO155: Examine various techniques of inventory management and develop an understanding of receivables management. CO156: Develop the different strategies in promoting continuous and comprehensive learning among |
Approach in teaching: Interactive sessions using whiteboards, Questioning & Discussion, Reading assignments, Frequent or unannounced quizzes. Learning activities for the students: Self learning assignments, Effective questions, presentation, Solving problems of unsolved questions, Presentations, Project tasks |
Continuous Assessment Test, Semester end examinations, Quiz, Assignments, Class interaction |
Nature of Financial Management:
Finance and related disciplines; Scope of Financial Management; Profit Maximization, Wealth Maximization - Traditional and Modern Approach; Functions of finance. Capitalization – Under Capitalization and Over Capitalization.
Sources of finance:
Classification - Short Term and long term sources of finance. Introduction about Financial Institutions-IDBI, IFCI, ICICI Working Capital Management: Operating cycle method and Net current asset or forecasting method.
Capital Structures:
Approaches to Capital Structure Theories - Net Income approach, Net Operating Income approach, Modigliani-Miller (MM) approach, Traditional approach. Dividend Policy: Dividend models MM hypothesis, Walter's model, Gordon's model. Leverage Analysis: Operating and Financial Leverage
Capital Budgeting –
Principles and Techniques; Nature and meaning of capital budgeting; Estimation of relevant cash flows and terminal value; Evaluation techniques - Accounting Rate of Return, Net Present Value, Internal Rate of Return, Net Terminal Value, Profitably Index Method. Management of Cash and Liquidity: Motives of holding cash, cash management, Cash Planning and Forecasting.
Management of Inventory:
Need to hold inventory, Objectives, importance and functions of Inventory Management, Techniques of Inventory control.
Management of Receivables: Cost associated with receivables, Objective and Factors affecting Investment in receivables, Credit Evaluation.
- I.M. Pandey: Financial Management: Theory and Practices, Vikas Publishing House
- M.Y. Khan & P.K. Jain: Financial Management Text Problem and Cases, Tata McGraw Hill Pubilshlng Co. Ltd.
- R. P. Rustogi: Financial Management: Theory Concepts and Practices, Taxmann Publication.
Suggested Readings:
- J.V. Horne & J.M. Wachowicz: Fundamentals of Financial Management Prentice Hal
- R.A. Brealey, S.C. Myers, F. Allen& P. Mohanty: Principles of Corporate Finance, McGraw Hill Higher Education
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