Financial Management

Financial Management
Subject Code: MBA 247 2 Credits
Course Description
In this course, the focus shifts from recording and analyzing the financial books to using the
accounting information efficiently for managerial effectiveness. While financial accounting
provides information for external users, financial management forms a useful tool for internal
users namely the managers. Students learn concepts of financial management such as time
value of money, cost of capital, capital structure, dividend policy and sources of finance and
further learn to use these concepts for decision making.
Learning Outcome
1. To understand the important elements of finance concepts for running a business.
2. To appreciate decision facilitating roles of accounting information.
3. To inculcate problem-solving skills with an application orientation to solve business
problems of the real world.
4. To appreciate the ethical and social dimensions of managing finance in business.
Level of Knowledge: Basic, Applied / Working
Unit I Overview of Corporate Finance (Self Learning Module)

Scope of finance, Finance functions, financial managers role, financial goal
Profit maximization vs. wealth maximization, Organization of finance function.
Unit II Time Value of Money (4 Hrs)

Level of Knowledge: Working Knowledge
Time preference for money; Future value of a single cash flow & annuity, Present value of a
single cash flow of a single cash flow and annuity, Simple interest & compound interest, Capital
recovery & loan amortization, Stated vs. effective rate of interest
Unit III Cost of Capital (4 Hrs)

Objectives: Concept of opportunity cost of capital, Method of calculating cost of capital- cost of
debt, preference & equity capital, CAPM model, Determination of weighted average cost of
capital (WACC), Weighted marginal cost of capital.
Unit IV Investment Decision (7 Hrs)

Objectives: Nature of investment decision, Type of investment decision, Investment evaluation
criteria, Compare & contrast NPV & IRR. Determining cash flows for investment analysis: Cash
flows v/s profit Incremental cash flows, components of cash flows.
Unit V Working Capital Management (4 Hrs)

Objectives: Needs for investing in current assets, Concept of working capital management.
Approaches in working capital, Factors affecting working capital management Estimation of
working capital requirement, Receivable management, Working capital finance decision.
Unit VI Capital Structure and Dividend Policy (6 Hrs)

Introduction, planning the capital structure, capital structure theory (in brief), Factors in
determining capital structure decisions. EPS / EBIT analysis and EPS/ ROE analysis.
Dividend theories (Walter, Gordon, M&M), Dividend policies in practice, Bonus shares.
Unit VII Sources of Finance (5 Hrs)

Sources of Long-term Finance: Shares, Debentures and term loans; Raising long-term finance-
IPO, Right issue, Private placement etc. International sources of finance ECB, FCCB, ADR,
GDR etc (only the product and not the process of raising money).
[Total 30 Hours]
Essential Reading
1. Brigham & Houston, (2015), 13th Edition, Fundamentals of Financial Management, Cengage Learning
2. Chandra, P. (2010). Fundamentals of Financial Management. Tata McGraw-Hill Education.
3. Khan, M. Y., & Jain, P. K. (2010). Financial Management. Tata Mac Graw Hill Publishing Co. Ltd.
4. Pandey,I M(2010) Financial Management.(10e)Vikas Publishing House Pvt Ltd.
Recommended Reading
1. Banerji, A.S.K. (2002). Financial Management and Policy. S.Chand & Co.
2. Brealey, R. A. (2007). Principles of Corporate Finance. Tata McGraw-Hill Education.
3. Madhu, V. (2002). Multinational Financial Management. Excell Books Publications.
4. Pandey, I.M. (2010). Financial Management (10th ed.). Vikas Publication House.
5. Shah, P. P. (2005). Financial Management ( with CD Indian text edition) Dreamtech Press.
6. Van, Horne James, C. (2002). Financial Management & policy (12th ed.). Pearson Education, India.
Evaluation Pattern:
2 CIAs
Mid Trimester: Part A, B and C
End Trimester: Part A, B, C and D

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Subject Code: MBA 247 2 Credits

Level of Knowledge: Basic, Applied / Working

Unit I Overview of Corporate Finance (Self Learning Module)

Unit II Time Value of Money (4 Hrs)

Unit III Cost of Capital (4 Hrs)

Unit IV Investment Decision (7 Hrs)

Unit V Working Capital Management (4 Hrs)

Unit VI Capital Structure and Dividend Policy (6 Hrs)

Unit VII Sources of Finance (5 Hrs)

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