ADMAS UNIVERSITY

FACULTY OF BUSINESS
DEPARTMENT OF ACCOUNTING AND FINANCE
COURSE OUTLINE
Course Title Financial Management I
Course Code AcFn 3051
Credit Hours 3
Prerequisites Fundamentals of Accounting II
Program BA Degree in Accounting and Finance
Academic Year
Instructors’ Name
Course Coordinator
Department Head
Course Description The course deals with the nature and scope of financial management, financial
analysis, valuation concepts, cost of capital and long-term investment decision.
Course Objective At the end of this course students will be able to:
 understand the basic theoretical concepts of finance functions in modern business
enterprise;
 evaluate alternative sources of finance and investment decision;
 identify the advantage and disadvantage of debt financing;
 measure and evaluate financial performance of an organization;
 perform valuation of financial assets.

Course Contents
Chapter Topic Time
allotted
1 OVERVIEW OF FINANCIAL MANAGEMENT 4hrs
1.1. Major Areas of Finance: Financial Services Vs Financial
Management
1.2. Finance and Related Disciplines
1.2.1 Finance and Accounting
1.2.2 Finance and Economics
1.2.3 Finance and Other Related Disciplines (Marketing,
Production, Quantitative Methods)
1.3. Scope of Financial Management
1.3.1 Traditional Vs Modern Views
1.3.2 Functions of Financial Management
1.3.3 Key Activities of the Financial Manager
1.4. Objectives of Financial Management
1.4.1 Profit/EPS Decision Criterion
1.4.2 Wealth Maximization Decision Criterion (MVA and EVA)
 1.5. Overview of Selected Finance Theories
1.5.1 Agency Problem (Theory)
1.5.2 The Concept of Perfect Capital Markets
1.5.3 Security Market Efficiency
1.5.4 Risk and Return: Trade offs
2 FINANCILA ANALYSIS & PLANNING 10 hrs
2.1. Financial Analysis
2.1.1 Why Financial Analysis?
2.1.2 Financial Statements and Process of Financial Analysis
2.1.3 Considerations in Financial Analysis
2.1.4 Types and Tools of Financial Analysis
2.1.5 Types of financial ratios and interpretations
2.2. Financial Planning
2.2.1 Meaning of Financial Forecasting
2.2.2 Strategic Considerations in Financial Forecasting
2.2.3 Steps in Financial Forecasting
2.2.4 Techniques of Financial Forecasting
2.2.5 Recent Developments in Financial Forecasting
3 VALUATIONS OF FINANCIAL INSTRUMENTS & COST OF 8 hrs
CAPITAL
3.1. Valuation of Bonds and Stocks (Securities)
3.1.1 General Features of Debt & Equity Securities
3.1.2 Direct and Indirect Claims
3.1.3 Valuation: Meaning and Importance
3.1.4 The General Valuation Model
3.1.5 Valuation of Corporate Bonds
3.1.6 Valuation of Common and Preferred Stocks
3.2. Cost of Capital
3.2.1 Cost of Capital: Meaning, Theories, and Basic Assumptions
3.2.2 Alternative Models (DVM and CAPM)
3.2.3 Specific Costs of Debts, Preferred Stocks, Common Stocks, and
Retained Earnings
3.2.4 Weighted Average Cost of Capital
3.2.5 Marginal Cost of Capital
4 BASICS OF RISK AND RETURN 4hrs
4.1. Definition of Return and Risk
4.2. Measuring Return
4.3. Measuring Risk
4.4. Portfolio Risk and Return
4.5. Risk – systematic and unsystematic risk
4.6. Risk and Return – Diversification
5 LONG TERM INVESTMENT DECISIONS (CAPITAL BUDETING 12hrs
DECISIONS)
 5.1. Introduction
5.1.1 Meaning and Importance of Capital Budgeting
5.1.2 Difficulties in Capital Budgeting
5.1.3 Types of Long-Term Investments
5.2. Underlying Assumptions in Capital Budgeting
5.3. Parts of Investment and the Concept of Cash Flows
5.3.1 Parts of Investment Cash Flows
5.3.2 Principles of Cash Flow Projection
5.3.3 Determining Project Cash Flows
5.4. Appraisal of Long-Term Investments
5.4.1 Financial Appraisal Criteria
5.4.2 Independent Vs Mutually Exclusive Projects
5.4.3 Comparison of the Various Appraisal Criteria
5.4.4 Financial Appraisal Under Conditions of Capital Rationing
5.4.5 Appraisal of Projects with Unequal Lives
5.5. Project Evaluation under Condition of Uncertainty (Risk)
5.5.1 Certainty Equivalent Factor (CEF)
5.5.2 Risk Adjusted Discount Rates (RADR)
5.5.3 Capital Budgeting under Inflationary Situation (Real Vs
Nominal Rates)
6 CAPITAL STRUCTURE AND THE CONCEPT OF LEVERAGE 10hrs
6.1 Brief Concept of Capital Structure:
6.1.1. EBIT –EPS Analysis
6.1.2. Capital structure theories with symmetric information, including
6.1.3. The Modigliani-Miller (MM) irrelevance propositions
6.1.4. Capital structure with tax and financial distress costs
6.1.5. Key Business Considerations
6.2 The Concept of Leverage:
6.2.1. Leverage and its meaning
6.2.2. Types of Leverage:-
6.2.3. Operating Leverage,
6.2.4 Financial Leverage, and
6.2.5. Combined Leverage
6.2.6. Effects of Leverage
Roles of the Instructor He/she will come to the class regularly on time and deliver the lecture in a
well-organized manner. Besides, at the end of each class he/she gives
reading assignment for the next class. He/she will make sure that a proper
assessment is given. He/she is also responsible to give feedback for each
assessment
Roles of the students The success of this course depends on the students‟ individual and
collective contribution to the class discussions. Students are expected to
participate voluntarily, or will be called upon, to contribute to set exercises
and problems. Students are also expected to read the assigned readings and
 prepare the cases before each class so that they could contribute effectively
to class discussions. Students must attempt assignments by their own.
Proficiency in this course comes from individual knowledge and
understanding. Copying the works of others is considered as serious
offence and leads to disciplinary actions

Teaching & Learning Methods

 Lectures
 Group Discussion
 Question & Answers
 Presentations
 Problem based learning

Assessment Methods
Assessment Chapters (Topics) to be Weight
covered
Assessment I: Test 1 Chapters 10%
Assessment II: Test 2 Chapter 10%
Assessment III: Individual Assignment Chapter 10%
Assessment IV: A)Group Assignment 10%
B)Presentation of 10%
Group Assignment
Final Exam All chapters 50%
Total Points 100%

Text Book
 Ross, Westerfield and Jaffe. (2013). Fundamentals of Corporate Finance:
Standard Edition. 10th ed McGraw-Hill New York
 Bringham and Ehrhardt (2011) Financial Management: Theory and Practice
13th ed. South-Western, Ohio
Reference:
 Bringhamand Ehrharat (2008) Financial Management-Theory and Practice;
12th ed. South-Western, Ohio
 Brigham. E.F. (2006) Fundamentals of Financial Management, 9th ed The
Dryden press, South-Western, Ohio
 Brigham and Houston. (2001)Fundamentals of Financial Management, 7th Ed,
South-Western 2001 South-Western, Ohio
 Ross, Westerfield and Jaffe. (2013). Corporate Finance.10th ed McGraw-Hill
New York
 Brealey, Myers and Allen.( 2011) Principles of Corporate Finance. 10th ed
McGraw-Hill New York
 Ehrhardt and Bringham (2011) Corporate Finance: A Focused Approach 4th ed
South-Western, Ohio
 Van Horne, James C. and Wachowicz, John M. (2008), Fundamentals of
Financial management, 13th ed, McGraw-Hill , Boston
 Watson and Head (2007).Corporate Finance Principles & Practice. 4th Prentice
Hall New York
 Chandra, P. (2004) Fundamentals of Financial Management 3rd ed. Tata
McGraw Hill, New Delhi.
 Gitman, L.J. (2002), Principles of Managerial Finance, 10th ed Prentice Hall
New York
 Brealey Myers(2000) Principles of Corporate Finance. 7th ed, McGraw-Hill
New York
 Khan and Jain (2000)Basic Financial Management Tata McGraw Hill New
Delhi