Course Outline: Financial Management - I

Course Code: Click or tap here to enter text.

Credit: 3, Core Course
Area: Finance
Program: PGDM (B&FS)
Term II Academic Year 2022-23
_______________________________________________________________________
Instructor(s) Name Prof. Prateek Bedi
Room no. 302
Email [email protected]
Phone (Extn no.) 131
Meeting Hours Any weekday with
prior appointment
______________________________________________________________________
1. COURSE DESCRIPTION
The course aims at covering two specific areas of financial management in detail – Capital Budgeting (or
Investment Decisions) and Capital Structure (or Financing Decision). The course will cover the following
aspects:

 Understanding the scope of financial management and role of Finance Manager

and inter-relationship with other functions
 Time Value of Money
 Financial evaluation of capital expenditure projects
 Capital Structure Theories
 Sources of Long term finance
 Determinants of Capital Structure
2. COURSE OUTCOMES (COs)

After going through the course, the students would be able to:

Course Outcome 1 (CO1):

To solve problems related with the time value of money and capital budgeting d

Course Outcome 2 (CO2):

To solve problems related with cost of capital, financial leverage and capital structure

Course Outcome 3 (CO3): To critically evaluate investment projects and offer solutions

Course Outcome 4 (CO4):

To critically evaluate capital structure alternatives and be able to offer solutions

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 3. MAPPING OF THE PROGRAM OUTCOMES (POs) AND COURSE OUTCOME (COs)

Program Outcomes (POs)

CO1 CO2 CO3 CO4
PO1: Student should be able to write well organized and
grammatically correct business reports and letters.
PO2: Student should be able to make effective oral
presentations.
PO3: Student should be able to demonstrate critical
thinking skills by understanding the issues, evaluating
alternatives on the basis of multiple perspectives and 3 3 3 3
presenting a solution including conclusions and
implications.
PO4: Student should be able to demonstrate problem
solving skills by understanding and defining the
problem, analyzing it and solving it by applying 3 3 3 3
appropriate theories, tools and techniques from various
functional areas of management.
PO5: Student should be able to illustrate the role of
responsible leadership in management.
PO6: Student should be able to identify social concerns
and ethical issues in management.
PO7: Student should be able to identify challenges
faced by the organization at the global level.
PO8: Student should be able to take decisions in the
global business environment.

4. PEDAGOGY

Basic concepts and theoretical framework would be developed through lectures and class exercises.
Applications of concepts and theories for problem solving would be achieved though numerical
illustrations. Case methodology would be used to enable the students to evaluate alternatives and take
decisions in real life business situations. It is expected that the students would come prepared with the
readings and cases given. The students are also expected to make use of `MS Excel’ for building financial
models for problem solving and analysis.

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 5. COURSE EVALUATION COMPONENTS (CECs)

Component 1: Quizzes (20%)

The quizzes will be compulsory and will be spread across the entire course. If any student misses
any quiz, no makeup quiz will be given later.

Component 2: Group Project (20%): Each group is expected to work on a project based on a
topic decided by the group. All groups are highly encouraged to discuss their respective project
topics and the associated analysis with the instructor. The project should involve collection of
relevant data from sources like ProwessIQ, Bloomberg, RBI’s website etc. and application of
tools and techniques covered in the course.

Component 3: Mid Term (30%)

Mid-term exam will cover approximately half of the total course. Exact syllabus will be
announced by the faculty in advance. Questions asked will cover theoretical concepts as well as
assess analytical capability.

Component 4: End Term (30%)

End term exam will include all the topics that will be covered during post midterm sessions. The
exam will assess subject understanding through application of concepts to analyze real life
business situations.

6. MAPPING BETWEEN COs, POs and CECs

Course Evaluation Components (CECs)

COs POs
Quizzes Mid-term Exam Project End-term Exam
CO1 PO3
✓ ✓ ✓
PO4
CO2 PO3
✓ ✓
PO4
CO3 PO3
✓ ✓
PO4
CO4 PO3
✓ ✓ ✓
PO4

7. RESOURCES
7.1 Textbook

Financial Management and Policy: James C Van Horne / Sanjay Dhamija, 12th Edition

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7.2 Reference Books

1. Ross, S., Westerfield, R., Jaffe, J. and Jordan, B., 2019. Corporate Finance. 12th ed. McGraw-Hill
Education.
2. Brigham, E. F. and Houston, J. F., Fundamentals of Financial Management. 14 th edition, South-
Western, Cengage Learning
3. Gitman, L. J., Megginson, W. L., and Smart, S. B., Principles of Corporate Finance. South-
Western, Cengage Learning
4. Brealey, R., Myers, S., Allen, F. and Mohanty, P., Principles of Corporate Finance. Tata
McGraw- Hill
5. Booth, L., Cleary, W.S. and Drake, P. P., Corporate Finance – Financial Management in a
Global Environment. Wiley India
6. Titman, S., Keown, A.J. and Martin, J.D., Financial Management Principles and Applications,
latest edition, Pearson.

7.3 Online References (if any)

 Corporate websites for annual reports

 Business Standard: https://www.business-standard.com/
 ET Prime: https://economictimes.indiatimes.com/prime
 Financial Times: https://www.ft.com/
 The Economist: https://www.economist.com/
 Mint: https://www.livemint.com/
 Pierre Vernimmen: http://www.vernimmen.com/
 Aswath Damodaran: http://people.stern.nyu.edu/adamodar/
 Money Control: https://www.moneycontrol.com/
 Yahoo! Finance: https://finance.yahoo.com/

7.4 Coursera Reference Module:

 Corporate Finance Essentials by Javier Estrada. Offered By IESE Business School
(https://www.coursera.org/learn/corporate-finance-essentials)
 Introduction to Corporate Finance by Michael R Roberts. Offered By University of
Pennsylvania (https://www.coursera.org/learn/corporate-finance-essentials)

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 8. SESSION PLAN
SESSION TOPIC PEDAGOGY READING
REFERENCE
1 OVERVIEW OF FINANCIAL Text-Book
MANAGEMENT Lecture and (Ch. 1)
Introduction to Financial Management, Scope Discussion
of Financial Management, Goal of Financial
Management. Goal of the Corporation: Value
Maximization vs. Profit Maximization,
Agency Theory
2 TIME VALUE OF MONEY Text-Book
Time-lines, Future Value, Present Value, The Lecture and (Ch. 2)
Power of Compounding, Solving for Interest Discussion
Rate and Time, Future Value of an Annuity,
Present Value of an Annuity, Perpetuities,
Continuous Compounding
3 TIME VALUE OF MONEY Text-Book
Numerical Exercises and concept discussion Problem Solving (Ch. 2)
in real life situations like:
 EMI calculation
 Retirement Planning
 Capital Redemption Reserve
4 BASICS OF CAPITAL BUDGETING & Text-Book
CASH FLOW ESTIMATION Lecture, Discussion (Ch. 8)
 Understanding the nature and & Problem Solving
importance of capital budgeting
 Estimation of Cash Flow
 Estimation of Incremental Cash Flow
 Opportunity cost, sunk cost
 Depreciation & tax issues
5 BASICS OF CAPITAL BUDGETING & Lecture, Discussion Text-Book
CASH FLOW ESTIMATION & Problem Solving (Ch. 8)
 Estimation of Incremental Cash Flow
 Opportunity cost, sunk cost
 Depreciation & tax issues
 Problem Solving
6 BASICS OF CAPITAL BUDGETING Problem Solving and Text-Book
Numerical Exercises on Cash flow estimation analysis (Ch. 8)

7-8 BASICS OF CAPITAL BUDGETING Text-Book

 Method of calculating NPV, IRR Lecture, Discussion (Ch. 8)
 MIRR & Problem Solving
 Profitability Index – Capital
Rationing
 Other methods – Payback period,
Discounted Payback

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 9 CAPITAL BUDGETING DECISIONS: Case Discussion: HBR Case No.
Case Analysis Sneaker 2013
BAB166
10-11 THE COST OF CAPITAL Text-Book
 Long term sources of finance Lecture, Discussion (Ch. 10)
 Concept of cost of capital and Problem Solving
 Measurement of cost of debt & cost of
equity (CAPM), cost of preferred
equity
12 THE COST OF CAPITAL Lecture, Discussion Text-Book
 Concept of levered and unlevered beta & Problem Solving (Ch. 10)
 Weighted Average Cost of Capital
13-14 RISK ANALYSIS IN CAPITAL Lecture, Discussion
BUDGETING and Problem Solving Text-Book
Risk Adjusted Discount Rate Method, (Ch. 9)
Certainty-Equivalent Approach
15 RISK ANALYSIS IN CAPITAL Problem Solving and Text-Book
BUDGETING Analysis (Ch. 9)
 Sensitivity Analysis
 Scenario Analysis
16 CAPITAL STRUCTURE THEORIES Lecture and Text-Book
 Modigliani & Miller Discussion (Ch. 11)
 Trade-Off Theory
 Pecking Order Hypothesis
17-18 LEVERAGE Lecture, Discussion Text-Book
 Financial Leverage and Problem Solving (Ch. 12)
 Operating Leverage
 Combined Leverage
 EBIT-EPS Analysis
19-20 DETERMINANTS OF CAPITAL Lecture and Case Text-Book
STRUCTURE Discussion (Ch. 12)
 Key Ratios Asahi India
 Control Considerations Glass Limited:
 Comparative Analysis Leverage, A
Double-edged
Sword
(W15457)

9. ACADEMIC INTEGRITY & CLASS RULES

a) Plagiarism is the use of or presentation of ideas, works that are not one’s own and which are not
common knowledge, without granting credit to the originator. Plagiarism is unacceptable in IMI

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 and will invite penalty. Type and extent of penalty will be at the discretion of the concerned
faculty.

b) Cheating means using written, verbal or electronic sources of aid during an examination/ quiz/
assignment or providing such assistance to other students (except in cases where it is expressly
permitted by the faculty). It also includes providing false data or references/list of sources which
either do not exist or have not been used, having another individual write your paper or
assignment or purchasing a paper for one’s own submission. Cheating is strictly prohibited at IMI
and will invite penalty as per policies of the Institute.