Financial Management

OBJECTIVES:

Facilitate student to

• Understand the operational nuances of a Finance Manager
• Comprehend the technique of making decisions related to finance function

‍

UNIT I - FOUNDATIONS OF FINANCE‍

Introduction to finance- Financial Management – Nature, scope and functions of Finance, organization of financial functions, objectives of Financial management, Major financial decisions – Time value of money – features and valuation of shares and bonds – Concept of risk and return – single asset and of a portfolio.

UNIT II - INVESTMENT DECISIONS

‍Capital Budgeting: Principles and techniques – Nature of capital budgeting-Identifying relevant cash flows – Evaluation Techniques: Payback, Accounting rate of return, Net Present Value, Internal Rate of Return, Profitability Index – Comparison of DCF techniques – Concept and measurement of cost of capital – Specific cost and overall cost of capital.

UNIT III - FINANCING AND DIVIDEND DECISION

‍Leverages – Operating and Financial leverage – measurement of leverages – degree of Operating & Financial leverage – Combined leverage, EBIT – EPS Analysis- Indifference point. Capital structure – Theories – Net Income Approach, Net Operating Income Approach, MM Approach – Determinants of Capital structure. Dividend decision- Issues in dividend decisions, Importance, Relevance & Irrelevance theories- Walter‟s – Model, Gordon‟s model and MM model. – Factors determining dividend policy – Types of dividend policies – forms of dividend.

UNIT IV - WORKING CAPITAL MANAGEMENT

‍Principles of working capital: Concepts, Needs, Determinants, issues and estimation of working capital – Receivables Management – Inventory management – Cash management – Working capital finance : Commercial paper, Company deposit, Trade credit, Bank finance.

UNIT V - LONG TERM SOURCES OF FINANCE

‍Indian capital market- New issues market- Secondary market – Long term finance: Shares, debentures and term loans, lease, hire purchase, venture capital financing, Private Equity.

‍