Financial management – Introduction to financial management, objectives of financial management – profit maximization and wealth maximization. Changing role of finance managers. Interface of Financial Management with other functional areas.
Sources of Financing: Shares, Debentures, Term loans, Lease financing, Hybrid financing, Venture Capital, Angel investing and private equity, Warrants and convertibles (Theory Only)
Emerging Issues: Risk management, Behavioral finance and Financial engineering.
Time value of money –Future value of single cash flow & annuity, present value of single cash flow, annuity & perpetuity. Simple interest & Compound interest, Capital recovery & loan amortization.
Cost of Capital Cost of capital – basic concepts. Cost of debenture capital, cost of preferential capital, cost of term loans, cost of equity capital (Dividend discounting and CAPM model) - Cost of retained earnings - Determination of Weighted average cost of capital (WACC) and Marginal cost of capital.
Investment decisions – Capital budgeting process, Investment evaluation techniques – Net present value, Internal rate of return, Modified internal rate of return, Profitability index, Payback period, discounted payback period, accounting rate of return.
Working capital management – factors influencing working capital requirements - Current asset policy and current asset finance policy- Determination of operating cycle and cash cycle - Estimation of working capital requirements of a firm (Does not include Cash, Inventory & Receivables Management)
Capital structure and dividend decisions – Planning the capital structure. (No capital structure theories to be covered) Leverages – Determination of operating leverage, financial leverage and total leverage. Dividend policy – Factors affecting the dividend policy - Dividend Policies- Stable Dividend, Stable Payout (No dividend theories to be covered)