MBACC 202: FINANCIAL MANAGEMENT

Course Objective: The objective of this course is to provide the basic understanding
of corporate finance concepts. To enable the students, synthesize and explain the
corporate financial functions and decision-making dynamics in the broad framework of
a financial system.

Course Outcome: The course will prepare students

• To appraise and analyse the role and functions of a finance manager
• To assess the utility of concepts and principles of Financial Management from
the point of view of wealth maximisation objective of a firm
• To apply the course concepts in analysing capital structure and project
investment decisions.
• To demonstrate the application of basic principles of Financial Management in
varying situations of risk return trade-offs, cash management, credit and
inventory management.
• To evaluate the outcomes of a firm’s decision to use various financial assets in
short and long term

Unit I:
Nature of Financial Management: Scope and objectives of finance, role and functions
of finance manager, risk-return trade off, shareholders’ wealth maximization, agency
problem, General awareness of financial environment-financial instruments, regulation
and markets.

Unit II:
Investment Decisions: Analysis of Capital budgeting decisions, application of
discounted and non-discounted techniques in capital budgeting, time value of money,
capital rationing, risk analysis in capital budgeting.

Unit III:
Financing Decisions: Cost of Capital and & Dividend Decision: Optimum capital
structure, financial and operating leverages, sources of long-Term Finance, cost of
capital-components’ costs and Combined Cost (WACC), capital structure theories.

Unit IV:
Dividend theories, Irrelevance of dividend, MM Hypothesis, relevance of dividend and
Walter’s model, dividend policy determinants, share repurchase or buyback, Issue of
bonus share and its implications,

Unit V:
Working Capital Management: Principles of working capital management, Accounts
Receivable management, Inventory management and Cash management, factors
influencing working capital requirement, computation of working capital required in
business firm.

References: -
1. Principles of Managerial Finance by Lawrence J. Gitman, Pearson
2. Financial Management and Policy by Van Horne, Dhamija, Pearson
3. Fundamentals of Financial Management by Dr. R.P. Rastogi, Taxman’s
4. Financial Management by Ravi M Kishore, Taxman’s
5. Financial Management-Text Problems and Cases by Khan and Jain, Mc Graw Hill
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