Financial Management I

1. Introduction to Financial Management

Dr. Suresh suresh.suralkar@gmail.com Phone: 40434399, 25783850

Evaluation
Class Participation & Attendance 10%

Group Assignment: Gr. of 5, Class Presentation

15%

Individual Assignment: Solve and submit in handwritten one question paper of any previous year 10%

Written Test

15%

Final Exam (30% objective, 50% numerical & 20% theory) 50%
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Class Presentation Schedule

Group (of 5 max.) Case / Chapter
Case 1: Modi Rubber vs. Financial Institutions Ch. 1 & 2: Intro. to FM, Overview of Financial Markets

Dt.
16.6 23.6

Case 2: Essar Steel: Defaulting on Debt Repayment

Ch. 3 & 4: Sources of Long Term Finance, Raising Long Term Finance Case 3: Reliance Petroleums TOCD (A) Ch. 5 & 6: Intro. to Risk and Return, Time Value of Money Case 4: Reliance Petroleums TOCD (B) Ch. 7 & 8: Valuation of Securities, Cost of Capital Case 5: Cost of Capital at Ameritrade Ch. 9 & 10: Basics of Capital expenditure decisions, Analysis of Project Cash Flows Case 6: Valuing Sifys Acquisition of IndiaWorld Ch. 11: Risk Analysis and Optimal Capital Expenditure Decisions, Case 7: Financial Management at Bajaj Auto

30.6
7.7 14.7 21.7 28.7 4.8 11.8 18.8 25.8 1.9

Course Content - Syllabus

Sr Title ICMR Ch. PC Ch. IMP Ch.

1 Introduction to Financial Management

2 Overview of Financial Markets 3 Sources of Long-Term Finance 4 Raising Long-term Finance

1*
2*

1
2

1
-

5 Introduction to Risk and Return

6 Time Value of Money 7 Valuation of Securities 8 Cost of Capital 9 Basics of Capital Expenditure Decisions 10 Analysis of Project Cash Flows and Optimal Capital 11 Risk AnalysisDecision Expenditure

*Book preference

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Introduction to Financial Management

Reference Books 1. Financial Management, ICMR Book, Chapter 1 2. Financial Management, Prasanna Chandra, 7th Edition,

Chapter 1
3. Financial Management, I. M. Pandey, 9th Edition, Chapter 1
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Syllabus - Introduction to Financial Management

1. Objectives 2. Functions and Scope 3. Evolution

4. Interface of Financial Management with Other

Functional Areas 5. Environment of Corporate Finance
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1. Objectives
For finance Professions For non-finance professionals: every function is associated with money e.g. R&D, Engineering / Technology, Operations, Marketing, Purchasing, HR
.
Money Manpower Machinery

Salary, Rent, Electricity, Maintenance Expenses

Product

Services

Liquidity Profitability Trade-off Performance Evaluation / Improvement: Ratios, Stock Returns Business Modeling & Simulation Optimization of Resources Social Benefits, especially PSUs

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2. Functions and Scope (contd.)

Board of Directors Managing Director

CFO or Finance Manager

COO or Operations Manager

CTO or Technology Manager

CMO or Marketing Manager

Purchase
Manager

HR
Manager

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2. Functions and Scope (contd.)

Chief Financial Officer or Finance Manager

Treasurer
Cash Manager Credit Manager

Controller
Financial Accounting Manager Cost Accounting Manager

Capital Budgeting Manager

Portfolio Manager

Fund Raising Manager

Tax Manager

Data Processing Manager

Internal Auditor

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2. Functions and Scope

Equity

Mobilization of Funds (Raising Capital)

Debt

Fixed Assets Current Assets

Deployment of Funds Control over the use of funds

Risk-return trade-off
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3. Evolution
Historical 20th Century growth 1. Traditional Phase: up to 1940 Capital raising, business expansion, M&As, liquidation 2. Transitional Phase: 1940 and 1950s Focus on day to day issues, WCM 3. Modern Phase: Mid 1950s onwards Use of quantitative methods and Analytical, focus on use of funds to shareholders wealth creation, Capital Budgeting, Asset pricing theory, Capital structure theory, Efficient market theory, Option pricing theory, Agency theory, Valuation models, Dividend policy, WCM, Financial Modeling, Behavioral Finance 10 / 12

4. Interface of Financial Management with Other Functional Areas

Board of Directors Managing Director

CFO or Finance Manager

COO or Operations Manager

CTO or Technology Manager

CMO or Marketing Manager

Purchase Manager

HR Manager

Finance Economics, Accounting, Production, Purchase, Marketing Top Management Finance Other Challenges: Treasury, Forex, Optimum debt / equity, Share Prices, Management control
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5. Environment of Corporate Finance

External Environment: Global, National, Sectoral, Legal Forms of Businesses
Proprietary

Partnership: 2 or more up to 50 members.

Public Limited Companies: More than 50 members.

Regulatory Framework
Companies Act 1956.
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