Working capital management – Determination of level of current assets. Sources for financingworking capital. Bank finance for working capital. (No problems on estimation of workingcapital). Working capital financing: Short term financing of working capital, long termfinancing of working capital. Working capital leverage.
Cash Management – Forecasting cash flows – Cash budgets, long-term cash forecasting,monitoring collections and receivables, optimal cash balances – Baumol model, Miller-Orrmodel, Strategies for managing surplus fund.
Receivables Management – Credit management through credit policy variables, marginalanalysis, Credit evaluation: Numerical credit scoring and Discriminate analysis. Control ofaccounts receivables, Problems on credit granting decision.
Inventory Management: Determinations of inventory control levels : ordering, reordering,danger level. EOQ model. Pricing of raw material. Monitoring and control of inventories, ABCAnalysis.
Capital structure decisions – capital structure & market value of a firm. Theories of capitalstructure – NI approach, NOI approach, Modigliani Miller approach, traditional approach.Arbitrage process in capital structure. Planning the capital structure: EBIT and EPS analysis.ROI & ROE analysis. Capital structure policy
Dividend policy – Theories of dividend policy : relevance and irrelevance dividend decision.Walter’s & Gordon’s model, Modigliani & Miller approach. Dividend policies – stable dividend,stable payout and growth. Bonus shares and stock split corporate dividend behaviour. Legal andprocedural aspects of dividends Corporate Dividend Tax.
Special issues in financial managementCorporate financial modelling Agency problem and consideration. Effect of inflation on Assetvalue, firm value, returns Financial planning – Basis of financial planning, sales forecast method,pro-forma P & L account method, pro-forma balance sheet method, determination of ExternalFinancing Requirement (EFR).