i.

ii.

Introduction: This course is designed to focus on the theoretical and practical aspects of financial management. The course contains tools and techniques of financial management, which can be applied in the specific area of business, to manage operating, financing and investing activities.

S-601 - STRATEGIC FINANCIAL MANAGEMENT

STAGE-6

iii. Outcomes: On completion of this course, students should be able to:  identify the objectives of the business in financial terms and evaluate their attainment, INDICATIVE GRID:

Objectives: To provide the students with an in-depth knowledge of strategic financial management enabling them to:  understand and apply strategic approach of financial management,  use financial instruments for strategic financial management,  examine the financial goals and policy of the business for proper application, and  develop financial plan to manage various financial activities of business.

 identify various financial techniques and describe their applications,  review the financial statements of the business and evaluate the financial position,  develop financial plan to control short and long-term finances,  identify and evaluate working capital position, in the light of policy, and recommend to manage it properly,  calculate and evaluate the cost of capital,  develop and evaluate capital budgeting and recommend methods of funding investments,  explain the criteria that management uses to determine whether profit should be reinvested or paid out as dividends,  outline the factors to be considered in the development of dividend policy,  identify and evaluate the financial and strategic implications of proposals for mergers and acquisitions,  describe the procedures for transfer of money from one country to another,  describe the procedures for foreign exchange control in business,  explain various steps involved in mergers & acquisitions & corporate restructuring,  describe how to manage financial risks. WEIGHTAGE 15%

TOTAL 100% Note: The weightage shown against each section indicates, study time required for the topics in that section. This weightage does not necessarily specify the number of marks to be allocated to that section in the examination. CONTENTS

SYLLABUS CONTENT AREA SECTION-A FINANCIAL PLANNING AND ANALYSIS 1. An Overview of Financial Management & Managerial Finance 2. Analysis of Financial Statements 3. Financial Planning and Forecasting SECTION-B SHORT AND MEDIUM-TERM STRATEGY 4. Working Capital Policy 5. Managing Cash and Marketable Securities 6. Credit Management 7. Inventory Management 8. Short-term Financing SECTION-C LONG-TERM STRATEGY-I 9. The Cost of Capital 10. Capital Budgeting 11. Capital Structure 12. Portfolio Theory and CAPM SECTION-D LONG-TERM STRATEGY-II 13. Dividend Policy 14. Multi-national Managerial Finance 15. Mergers & Acquisitions 16. Corporate Restructuring 17. Managing Financial Risks

20%

40%

25%

12. terms of credit. Miller-Orr Model. leverage and risk. weighted average cost of capital. generating ideas for capital budgeting. offering discounts. 2. 6. SECTION-C LONG-TERM STRATEGY-I 9. Managing Cash and Marketable Securities Cash management. monitoring accounts 13. cash flow estimation. role of professional advisors. 10. projected (pro-forma) financial statements. EOQ model extension. lease versus buying decision. agency relationships and the external environment. relevant cash flow. valuation bases for assets. marketable securities. the accuracy of financial statements. and pros and cons of these methods. Short-Term Financing Sources of short-term financing. accounts payables. operating leverage. basis of lease or buy-decision. and other factors influencing credit policy. the cash / operating cycle. introduction to project risk analysis. the cost versus benefits of cash management. commercial papers. links between investment decisions & customer requirements. advantages and disadvantages of short – term financing and long term financing. the international monetary system and exchange . the requirements of external working capital financing. role and advantages of a treasury department. role of finance in organisational structure of the firm. determining the optimal capital structure. short. using receivable as a source of finance through factoring. working capital investment and financing policies. project classification. the goals of corporation. other considerations in forecasting. (WACC).SECTION-A FINANCIAL PLANNING AND ANALYSIS 1. managerial actions to maximise shareholders’ wealth. cash management techniques. accruals. lengthening credit period of customers. the relationship of working capital items. comparison of the NPV and IRR methods. Portfolio Theory and CAPM SECTION-D LONG-TERM STRATEGY-II 5. APV (Adjusted present value). An Overview of Financial Management & Managerial Finance Importance of managerial finance. the responsibilities of manager finance. SECTION-B SHORT AND MEDIUM-TERM STRATEGY 4. capital budgeting evaluation techniques. 3. financial break-even analysis. The Cost of Capital Cost of debt. efficient market hypothesis. Baumol Model. opportunities for additional sales. long-term debt and finance leases. multi-national versus domestic managerial finance. Credit Management The credit function. 11. Working Capital Policy Working capital terminology. Multi-national Managerial Finance Multi-national corporations. domestic and international longterm finance: share capital. ratio analysis. and residual dividend policy. managing inventory. effects on market value. Analysis of Financial Statements Financial statements and reports. 7. uses and limitations of ratio analysis. 14. financial leverage. creditworthiness of a lender. credit collection policy. operating break-even analysis. cost of equity. and sensitivity analysis. Dividend Policy Dividend policy and shares’ value. objectives of financial management. cost of preferred stock. Capital Structure The target capital structure. pay-back period. interests of different stakeholders. credit policy.term bank loans. growth of capital invested and retained earnings and dividend policy. inventory control system. the cash budget. receivables. Capital Budgeting Importance of capital budgeting. financial control – budgeting and leverage. the operation of stock exchanges. marginal cost of capital. Financial Planning and Forecasting Sales forecast. managerial finance in the current perspective. cash break-even. bonus shares and share splits. capital budgeting. financial strategy and regulatory requirements. MM hypothesis and traditional theory of capital structure. factors influencing dividend policy. setting the credit standards. similarities between capital budgeting and security valuation. 8. beta (or market) risk. cost of retained equity. Inventory Management Types of inventory. monitoring inventory levels including calculation of safety stock using probabilistic Approach.

multi-national capital budgeting. preventive measures & active measures. forward contracts. horizontal. trading in foreign exchange. 15. techniques of restructuring: expansion techniques. Managing Financial Risk Derivatives securities. Corporate Restructuring Meaning and areas of restructuring. 17. motives & strategies influencing Mergers and Acquisitions. methods of payment in Mergers and Acquisitions. and venture capitalists and exit strategy. integration process after acquisition or merger (difference in culture & MIS). . commodity contracts. option contracts. hardware restructuring and software restructuring. and financial reorganisation. merger or acquisition. methods of take-over. categories of Mergers and Acquisitions. credit derivatives. interest rates. conglomerate & preference for group structure. inflation. types of amalgamation. multi-national working capital management. defensive strategies in hostile take-over bids. Mergers and Acquisitions Definition & meaning. reconstruction. strategies. reverse merger: steps in reverse merger. operational and financial motives. vertical. hedging risks. international capital structure.rates. 16. strategies for restructuring. tax benefits of Mergers and Acquisitions. intellectual property. steps in merger transactions. interest rate swaps. take-over. implications of restructuring. divestment techniques & other techniques. futures markets.

(Pvt) Ltd. Ehrhardt M. Tata Mc-Graw-Hill Publishing Co. Vikas Publishing House. Masjid Road. 576.Ltd.K Jain AUTHOR Prentice Hall of India Pvt.. Jangpura. South Western. Pandey PBP Eugene F. United Kingdom. Van Horne I. New Delhi 110001.4/12 Asif Ali Road New Delhi. Brigham and Michael C.. Ltd.Y Khan and P.CORE READINGS Financial Management and Policy Financial Management Management Accounting Financial Strategy Financial Management Theory and Practice Financial Management TITLE James C. Lahore. New Delhi. PUBLISHER ADDITIONAL READING . Professional Business Publications.M.

Sign up to vote on this title
UsefulNot useful