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SYLLABUS

Chapter Particular
No.

1 Meaning, Importance and Objectives of financial Management;

Time value of money; Conflicts in profit versus value
maximization principle; Functions of chief financial officer.

2 Risk and Return overview of capital market theory, Beta

Estimation, CAPM, and APT.

3 Management of working capital; Cash and Marketable securities

management; Treasury management, Receivables management,
Inventory management, financing of working capital.

4 Investment decisions: capital budgeting concept, theory. Cost

of capital. Risk analysis in capital budget

5 Financing decisions: concepts of operating and financial

leverage; Capital structure Theory and policy; Dividend Policy.
Different sources of finance: Asset Based financing Lease,
Hire Purchase and Project financing. Corporate Restructuring,
Merger and Acquisition.

Case/Problems
Note: 50% of the questions will be numerical.
 FINANCIAL MANAGEMENT
MATERIAL IN THE FORM OF QUESTION & ANSWERS
(ONLY THEORITICAL PORTION)

CONTENTS

S.No Chapter Name

1 Importance and Objectives of financial Management

4 Financing decisions

5. Multiple Choice Question

6 Case Study

7 Key Terms

8 Practical Part

9 Question Paper

10 Bibliography
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Chapter 1

Importance and Objectives of financial

Management
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Planning Raising of funds for

Financial
Organizing Investment of achieving
Management of
Coordinating funds & goals of
is
Controlling Distribution of organization
funds
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 Types of working capital

On the basis of balance Operating cycle method On the basis

sheet method of time

Gross working capital Networking capital Permanent working capital Variable or temporary
working capital

Seasonal working Specific working

capital capital
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Scope of Receivables
Management

Formulation Credit Evaluation Credit control

of credit policy

Formulation of Monitoring &

Credit Credit Collection collection controlling
Standards Terms Policy procedure receivables
- reminders through
- cash discount - Efficient
- use of billing system
Credit Cash Lenient Stringent factoring - Sales ledger
Period Discount services accounting
- average
collection
period
- Aging schedule
of receivables
- ABC Analysis
Collection of Credit Credit - Credit
Depends on 5 information from Analysis Limit utilization
various sources report
Character - Financial
(willingness to) - Accounting
statements ratios
Capacity Depends
- Credit rating
(ability to pay) agencies Amount Period
Capital i.e.
- Banks
(financial Charater
- Trade references
soundness) Capacity
- Firms own
Collateral Capital
experience
(securities/ Collateral
assets) Conditions
Conditions
(presently
prevailing)
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Ope rating objectives

Financial objective
(i) Regular flow of material
(i) Minimum investment or maximization
(ii) Minimization of risks due to
stock out. of returns on investments
(iii) Avoid obsolescence of stored (ii) Minimizing inventory costs.
Goods due to change in demand,
technology

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 Techniques of Inventory Control

Modern Techniques Traditional techniques

Economic order Re-ordering Fixing stock Selecting Inventory

quantity (EOQ) point (ROP) levels control Analysis

ABC VED SDE FSN

Analysis Analysis Analysis Analysis

Inventory Two Bin Perpetual Periodic order

control system Inventory system
ratios System
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 Urgency

Pay back period

Traditional

Net present value

Teachings of capital Budgeting

Average rate of return

Profitability index
Discounted
cash flow
Internal rate of return.

Terminal value
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(i)

(ii)

(iii)
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