20MBA22 Financial Management syllabus for MBA

Introduction

Meaning and objectives of Financial Management, changing role of finance managers. Interface of Financial Management with other functional areas. Indian Financial System: Financial markets, Financial Instruments, Financial institutions and financial services. Emerging issues in Financial Management: Risk Management, Behavioural Finance, Financial Engineering, Derivatives (Theory).

Time value of money

Meaning of hours 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. (Theory & Problem). Case Study on Loan amortization. Computer lab for calculation of future value, present value and loan amortisation in MS excel.

Sources of Financing:

Shares, Debentures, Term loans, Lease financing, Hybrid financing, Venture Capital, Angel investing and private equity, Warrants and convertibles (Theory Only). 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. (Theory & Problem). Case Study on WACC.

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 Problem). Risk analysis in capital budgeting-Case Study on replacement of capital project. (Numerical problems). Computer lab for calculation of NPV, IRR, PI, Payback period, ARR in MS excel.

Working Capital Management

Factors influencing working capital requirements - Current asset policy and current asset finance policy

Determination of operating cycle and cash cycle on Excel-

Estimation of working capital requirements of a firm. (Does not include Cash, Inventory & Receivables Management). Case study on Working Capital Determination and the impact of negative working capital Amazon-negative working capital and profitability. Computer lab for calculation of working capital cycle and operating cycle in MS excel.

Capital structure and dividend decisions

Capital structure and dividend decisions – Planning the capital structure-Governance of Equity and Debt, Fall in interest rates and perils of Debt funding. Leverages, EBIT and EPS analysis. ROI & ROE analysis. Capital structure policy. Dividend policy – Factors affecting the dividend policy - Dividend Policies- Stable Dividend, Stable Payout (No dividend theories to be covered). Case Study on EBIT-EPS analysis & Leverages.

Course outcomes:

At the end of the course the student will be able to:

1. Understand the basic financial concepts

2. Apply time value of money

3. Evaluate the investment decisions

4. Estimate working capital requirements

5. Analyze the capital structure and dividend decisions

Practical Components:

• Identifying the small or medium sized companies and understanding the Investment evaluation techniques used by them.
• Using the annual reports of selected companies, students can study the working capital management employed by them. Students can also compare the working capital management of companies in the same sector.
• Students can choose the companies that have gone for stock split and Bonus issue in the last few years and study the impact of the same on the stock price.
• Students can study any five companies capital structure
• Students can do Company analysis for select companies using profitability and liquidity ratios.

Question paper pattern:

The SEE question paper will be set for 100 marks and the marks scored will be proportionately reduced to 60.

• The question paper will have 8 full questions carrying equal marks.
• Each full question is for 20 marks.
• Each full question will have sub question covering all the topics under a Module.
• The students will have to answer five full questions; selecting four full question from question number one to seven and question number eight is compulsory.
• 40 percent theory and 60 percent problems in the SEE.

Textbooks

1 Financial Management Khan M. Y.& Jain P. K, TMH 7/e,

2 Financial Management Prasanna Chandra TMH 9/e,

3 Financial Management Prahlad Rathod ,Babitha Thimmaiah and Harish Babu HPH 1/e, 2015

4 Financial Management: A Strategic Perspective Nikhil Chandra Shil & Bhagaban Das Sage Publications 1/e, 2016

Reference Books

1 Financial Management I M Pandey Vikas Publishing 11/e, 2012

2 Principles of Corporate Finance Brealey, Myers, Allen & Mohanty McGraw Hill Education 11/e, 2014

3 Cases in Financial Management I.M.Pandey & Ramesh Bhat McGraw Hill Education 3/e, 2015

4 Corporate Finance Vishwanath S. R. Sage Publications 3/e, 2019