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AIR UNIVERSITY SCHOOL OF MANAGEMENT

Spring- 2017

Course Information

Course Title : Financial Management


Class : BBA 5th & BSAF 5th Credit Hours:03 (06 Case Studies)
Pre-requisite: Introduction to Business Finance, Principles of Accounting
Instructor : Mr. Imran Yousaf
Email : imran.yousaf@mail.au.edu.pk Tel No: 051-9262557-9 Ext(436)
Reference Book # 1: “Principles of Managerial Finance” by Lawrence J. Gitman
Reference Book # 2: “ Fundamentals of Financial Management ” by Eugene F. Brigham
Reference Book # 3: “Introduction to Corporate Finance” by Megginson and Smart

Course Objective:

The main goal of this course is to develop a foundation of financial management


concepts. This will enable to the student to understand how corporations make important
investment, financing, working capital and dividend policy related decisions. This course
covers wide range of topics including Time value of money, capital budgeting, cost of
capital, capital structure, working capital management, dividend policy, merger and
acquisition, and modes of Islamic finance. The case themselves depict a wide range of
financial problems and business situation. So, b ecause of the practical importance of the
material and as an illustration of the relevant theory, we will discuss examples and cases.

Lecture Plan:
Readings Quiz &
Classes Topics Assign
ment
01 Introduction of Financial Ch # 1 (Ref. Book 1)
Management
 Define Financial
Management
 Legal Form of business
organizations
 Goal of the Firm
 Agency Issue
Time Value of Money Ch # 4 (Ref. Book 1)
 Present value (Single
Amount, Annuity, Mixed
02 Stream) Quiz # 1
 Future Value (Single
Amount, Annuity, Mixed
Stream)
 Compounding Interest more Ch # 4 (Ref. Book 1)
frequently than annually
03
 Loan Amortization
 Growth Rate
Case of TVM
Case Study 1: Time Value of
04
Money-The Buy vs Rent decision
(IVEY Publishing)
Relevant Cash Flows Ch # 8 (Ref. Book 1)
 Initial investment
05
(outflows)
 Operating Cash Inflows
 Terminal Cash flows
06  Project’s relevant total
cash flows
Capital Budgeting Techniques: Ch # 9 (Ref. Book 1)
 Introduction
07
 Techniques of Capital
Budgeting
 Other Advance Techniques Ch # 9 (Ref. Book # 1)
 Projects with unequal
08 lives
 Projects with unequal
Scale
09  Capital Rationing Ch # 9 (Ref. Book # 1)

10 Practice Questions
Assignment
11 Cases of Capital Budgeting:
#1
Case Study 2: National Toys Ltd
Case Study 3: Hola Kola-The
Capital Budgeting Decision.
12
(Thunderbird School of Global
Management)
Capital Structure: Ch # 12 (Ref. Book # 3)
 Theories of Capital
Structure
 Modigliani and Miller
Capital Structure
13 Irrelevance
 M&M Capital Structure
Model with Taxes
 Agency Cost/Trade off
Model of Corporate
Leverage
 Pecking Order Theory
14  Market Timing Theory
 Behavioral Aspect
Weighted Average Cost of Ch # 11 (Ref. Book # 2)
Capital
15 Quiz # 2
Cost of Capital for Non-Listed
Firms (Through Levered Beta)
16 Practice Questions-WACC

Case Study 4: Orchard Mill


17
Development
Case Study 5: Marriott
Corporation-The Cost of Capital
18
(Abridged).(Harvard Business
School)
Leverage Ch # 12 (Ref. Book # 1)
19  Break Even Analysis
 Operating Leverage
 Financial Leverage Ch # 12 (Ref. Book # 1)
20
 Total Leverage
21 Practice Questions-Leverage
Working Capital Management Ch # 14 (Ref. Book # 1)
22  Cash Conversion Cycle

23  Inventory Management Ch # 14 (Ref. Book # 1)


 Accounts receivable Ch # 14 (Ref. Book # 1)
24
Management
Cases of Working Capital
Management:
Case Study 6: Shenzen JIT
25
Technology-Accounts Receivable
Management Issues (IVEY
Publishing)
Dividends Policy Ch # 18 (Ref. Book # 3)
23  Introduction
 Dividend Theories
 Factors affecting Dividend
Assignment
Policy
24 #2
 Types of Dividend Payment
Policies
 Stock Dividend Ch #13 (Ref. Book 1)
25  Stock Split
 Stock Repurchase
Merger and Acquisition: Ch # 17 (Ref. Book 1)
 Growth Strategies
 Merger and Acquisition
26
Process
 Antitakeover defense
strategies
Long Term Debt and Lease Ch # 16 (Ref. Book 1))
 Characteristics of Long
27 Term Financing
 Basic Types of Leasing
 Lease vs Purchase Decision
Practice Problems-Lease vs
28
Purchase Decision
29 Introduction to Derivatives
Revision
30

General Guidelines:

1. Students must bring text book and Scientific Calculator in the Class. Students are
required to have studied the relevant topics in advance from the course book.
2. Each written assignment should be prepared on separate sheet of paper in
handwriting. The front page of each assignment should contain the following
information: -Course Title -Name of the student -Assignment number -Date
prepared -Date submitted. The assignments should be submitted to class CR before
the start of the class. The class CR should ensure to submit them together to the
teacher at the very start of the class. No assignment shall be accepted once the class
starts. If an assignment is late, it can be submitted with the very next assignment
(but not thereafter) and shall be marked ‘late’. The assignments shall be marked on
completeness and timely submission. Late assignments shall be penalized

3. There will be surprise Quizzes. A total of ‘03’ quizzes shall be taken and 3-m shall
be taken into account for grading. ‘m’ will be at the discretion of the teacher.