Related content on Financial Management -2

Capital Structure: Theory and Policy

1. Definition of capital structure

2. Approaches of capital structure

3. The factors that affect capital structure decision.

5. Key assumptions of MM Proposition I

6. Criticisms of MM hypothesis.

7. Definition of financial distress.

8. Costs of financial distress.

10. Elements of capital structure

Reference books: 1. I m panday

2. PPT slide

Leverage
1. Define leverage

2. Types of leverage

3. Financial leverage vs. operating leverage

4. Capital structure decision process

5. Break-even point analysis with graph

6. Degree of total leverage

Reference books:

Gitman : page 584 ,*E12-2,3,4*p12-9,10,12

I m panday : page 306, p-14.3,14.4

 International Financial Management
1. Definition of Foreign Exchange Market

2. Types of exchange (i.e. direct and indirect exchange)

3. Classification of participants in foreign exchange market

4. Foreign exchange rates

5. Cross rates, Spot exchange rates and Forward exchange rates

7. Bid-ask spread

9. International parity relationships:

 Interest rate parity *Purchasing power parity

 Forward rates and future spot rates parity *International fisher effect

10. Foreign direct investment

11. Types of foreign direct investment

12. Multinational corporations

13. Objectives of MNCs

14. Role of MNCs

15. Forward and future contract

16. Difference between forward and future contract

17. Business risk vs. financial risk

18. International risk

19. Political risk

20. Why do companies go global?

21. six major factors that complicate financial management in multinational firms

22. Foreign exchange risk and hedging

 Transaction exposure*Economic exposure*Translation exposure

Reference books: I m panday *example, *p 34.2, 34.3, Exercise -all

 Working Capital Management
1. Working capital management.

2. Why is short term financial management is one of the most important and time
consuming activities of the financial manager?

3. working capital and net working capital

4. What is the difference between a firm’s operating cycle and cash conversion cycle?

5. Why is it important for a firm to minimize the length of its cash conversion cycle?

6. Strategies for managing cash conversion cycle

7. Inventory management?

8. Techniques for managing inventory levels

9. Definition and difference between permanent and variable working capital

10. Balanced working capital position

11. Determinants of working capital position

Reference books:

Exercise: Gitman : st14-1, st14-2. E14-1, E14-3, P14-1, p14-2, p14-5, p14-5,

Lease Financing
1. Define Leasing

2. Types of leases

3. Difference between operating lease and financial (capital) lease

4. Difference between lease and hire purchase

5. Describe 3 methods used by lessor to acquire assets to be leased

6. Describe the 4 basic steps involve in the lease vs. purchase decision process

7. List and discuss commonly cited advantage and disadvantage should be considered when deciding
whether to lease or purchase

Reference books:

Gitman* example *st16-1*p16-4,5,6

 Dividend Policy
1. Definition of dividend and dividend policy

2. Objectives of dividend policy

3. The Factors that affects dividend policy.

4. Stability of dividend

5. Forms of stability

7. Dangers of stability of dividend

8. Forms of dividend (i.e. cash dividend and stock dividend)

9. Advantages of bonus share

10. Limitations of bonus share

11. Bonus share vs. share split

12. Reasons for share split

13. Share split & Share Reverse split

14. The reasons for buyback of shares

Reference books:

I m panday *example, p-5,6

Gitman *st13-1,*p-13-13, p-14 p-17