GUJARAT UNIVERSITY

K.S.SCHOOL OF BUSINESS MANAGEMENT

[ FIVE YEARS’ FULL-TIME M.B.A. INTEGRATED DEGREE COURSE ]
FOURTH YEAR MBA SEM-2
Subject: FINANCIAL MANAGEMENT
OBJECTIVE

* To develop the insight into the finance function as a core activity in all
types of economic organizations.
* To appreciate the role of a finance executive in relation to other
functional areas in achieving the goal of maximization owners' wealth
* To acquaint the participants with the basic financial
decisions,viz. financing, investments and dividend decisions and to
develop the skill for using them as a contributory factor in
the wealth maximization objective.

Reference Books:
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1. "Financial Management - Theory & Practice" by prasanna Chandra, Tata
McGraw Hill, Publishing Co. Ltd., New Delhi.
2. "Financial Mananagement" by I.M. Pandey, Vikas Publishers, Bombay
3. "Managerial Finance" by J.Fred Weston, Thomas T. Copeland, Pub. The
Dryden Press,New York
4. "Financial Management" by James C.Van Hogne. Publishers: Prentice-Hall,
New Delhi.
5. "Principles of Financial Management" by Lawrence J. Gitman. Publishers:
Harper & Row Publishers, New York.
Working Syllabus:

Module-1:
• Introduction to finance
o Evaluation of financial management
o Goals of financial management
o Risk of return trade off
o Emerging role of financial manager in India
• Indian financial system
o Functions of financial system
o Financial instruments
o Financial institutions
o Financial markets
• Time value of money

Module-2:
• Cost of capital
o Cost of debt , preference capital and equity capital
o Weighted average cost of capital
• Capital budgeting
o Investment appraisal criteria

1
 o Net present value
o Benefit cost ratio
• Internal rate of return
o Payback period
o Accounting rate of return
• Risk and uncertainty in capital budgeting
o Certainty equivalent approach
o Risk adjusted discount rate approach
o Statistical distribution approach
o E(NPV) standard deviation

Module-3:
• Risk & return
• Capital structure theories
o Net income approach
o Net operating income approach
o Traditional position
o Modigliani & miller position
• Leverage analysis
• Source of long term finance

Module-4:
• Pricing of working capital
o Concept of working capital
o Factors effecting working capital requirement
o Level of current assets and current assets financing policy
o Operating cycle
o Estimating cash requirement for working capital
• Cash & liquidity management
o Cash budgeting
o Adjusted net income method
o Managing cash collection and disbursements
o Optimal cash balance
o Cash management models [Baumol’s model & Miller-orr models]
o Options for investing surplus funds
• Accounts receivables management
o Credit policy variables
o Credit evaluation of individual accounts
o Monitoring receivables
o Factoring
• Inventory management
o Introduction to inventory mgmt
o Inventory mgmt techniques

EOQ model

ABC analysis

2
Module-5:
• Working credit
o Bank credit
o Bank finance for working capital
o Regulation of bank finance
o Commercial paper
• Dividend thearoies
o Tradition position
o Walter model
o Gordon model
o Miller and modigllani position
• Dividend policy
o Pay out ratio
o Dividend as a residual approach
o Bonus shares v\s stock split
• Merges & acquisitions
o Reasons for merger
o Mechanics of merger
o Cost & benefits of a merger
• Introduction to international finance management
o Foreign exchange market
o Raising foreign currency finance