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Financial Management-I

Class of Course Code Credit : 2013 : SL FI 501 : 3 Academic Year Semester Sessions : First :I : 30

AIM
An understanding of basic functions of finance and its interface with other functional areas. To familiarize students with finance markets and instruments, develop working knowledge of fundamental tools and apply them in investment and financing decisions. REFERENCE BOOKS Financial Management Financial Management and Policy, 12 e
th th

AUTHOR / PUBLICATION Pandey I M, Vikas Publishing House Pvt Ltd Van Horne, James C. Prentice Hall - 2001

Financial Management: Theory and Practice, 6 e Chandra Prasanna, Tata McGraw-Hill - 2004 Financial Management , 7th e Financial Management: Text & Problems Ravi M. Kishore. Taxmann's - 2009 Khan, M Y / Jain, P K. Tata McGraw-Hill

Detailed Syllabus
Introduction to Financial Management: Objectives - Functions and Scope - Evolution -Interface of Financial Management with Other Functional Areas - Environment of Corporate Finance. Overview of Financial Markets: Financial Markets - Functions and Classifications of Financial Markets Introduction to Money Market - Forex Market - Government Securities Market -Capital Market - Derivatives Market -International Capital Markets Participants. Sources of Long-Term Finance: Introduction to Equity Capital and Preference Capital Debenture Capital Term Loans and Deferred Credit Government Subsidies Leasing and Hire Purchase Emerging sources of finance (Private Equity, FDI, FCCB.). Raising Long-term Finance: Initial Public Offering, Public issue by listed companies, Rights Issue, Preferential allotment, Private placement, Term Loans, Venture Capital. Introduction to Risk and Return: Risk and Return Concepts - Risk in a Portfolio Context -Relationship Between Risk and Return -CAPM and Dividend Capitalization Model. Time Value of Money: Introduction - Types of Cash flows - Future Value of a Single Cash Flow, Multiple Flows and Annuity - Present Value of A Single Cash Flow, Multiple Flows and Annuity,

Growing Annuity, Perpetuity.

Perpetuity

and

Growing

Valuation of Securities: Concept Of Valuation Bond Valuation - Equity Valuation: Dividend Capitalization Approach and Ratio Approach. Cost of Capital: Concept and Importance - Cost of debenture - Term loans - Equity capital and retained earnings - Calculation of Weighted Average Cost of Capital - Weighted Marginal Cost of Capital Schedule. Basics of Capital Expenditure Decisions: The Process of Capital Budgeting - Basic Principles in Estimating Cost and Benefits of Investments Appraisal Criteria: Discounted and NonDiscounted Methods (Pay-Back Period -Average rate of return - Net Present Value -Benefit Cost Ratio - Internal Rate of Return) Analysis of Project Cash Flows: Cash Flow Estimation - Identifying the Relevant Cash Flows - Cash Flow Analysis - Replacement, Cash Flow Estimation Bias - Evaluating Projects with Unequal Life - Adjusting Cash Flow for InflationIntroduction to project risk - Stand-Alone Risk Sensitivity and Scenario analysis.

Cases and Exercises


Unilever limited: Transforming the finance function Indian Financial System: A young entrepreneurs dilemma Suzlon Energy: Financing Problem Reliance Power Full IPO Cost of Equity: A CAPM Approach ABC Wealth advisors Ambuja Cement: WACC Tata Nano Project: Capital Investment Lessons Evaluation of Capital Investment Projects Source CDC

Sources of Long Term Finance (including case discussion) Raising Long Tem Finance Cases on Long Term Finance Introduction to Risk and Return (including case discussion) Cases on Risk and Return Time Value of Money (including case discussion) Case on Time Value of Money Valuation of Securities Cases on Valuation of Securities Cost of Capital Cases on Cost of Capital Basics of Capital Expenditure Decisions (including case discussion) Analysis of Project Cash flows Total

2 3 2 3 1 4 1 3 1 2 1 2 2 30

Suggested Schedule of Sessions


Topic Introduction to Financial Management (including case discussion) Financial Markets (including case discussion) No. of Sessions 1 2