ACCURATE INSTITUTE OF ADVANCED MANAGEMENT GR.

NOIDA
MBA Semester: II Subject: FINANCIAL MANAGEMENT Subject Code: MBA 027 Instructor: LOKESH VERMA Email: lokesh_arya1@yahoo.co.in COURSE OBJECTIVES The course intends to: 1. Develop understanding of Concepts of Finance and Time Value of Money including Risk and Return analysis; 2. Capture techniques of Capital Budgeting, Leverage and EBIT AND EPS analysis;
3. Explain the Concept and approaches of Capital Structure Decision. 4. Enable understanding Major topics include estimation of Cost of Capital, theories of dividend decision, Overview of Working Capital Management.

COURSE DESCRIPTION
Students gain a thorough understanding of Financial Concepts, Time Value of Money, Risk and Return analysis, and Leverage. Skills are developed in Estimation of Cost of Capital , Capital Budgeting, use Capital Structure Theories and Decisions, and Giving an overview of Working Capital Management. The primary method for teaching these points follows a two step approach. First, the student will be introduced to standard techniques. Next, these techniques will be applied through a variety of real world strategies. The end goal is to develop skills which the students can apply. Assignments: Each student will be required to complete a series of assignments. These assignments will require students to use theoretical models, and track strategy positions.

REQUIRED COURSE READING 1. Financial Management by Khan and Jain 2. Fundamentals of Financial Management by Prasanna Chandra 3. Financial Management by I M Pandey 4. Financial Management and Policy by Van Horne 5. Principles of Managerial Finance by Lawrence J. Gitman 6. Financial Management R P Rustagi 7. Financial Management by Knott G 8. Financial Management by Ravi M. Kishor 9. Corporate Finance Theory & Practice by Damodaran Teaching Method The main learning platform in this course will be your term project. Classes will consist of lectures, workshops, and discussion of your projects. Lectures will elaborate and reinforce the assigned textbook material. For this reason, the information will be covered quickly, allowing more time for examples and discussion. Therefore, it is important that

you complete the assigned readings before class and bring any assigned lecture notes to class. EVALUATION PROCEDURE Components and Weighting of the Course Evaluation Semester Exams 100 Sessional Exams 30 Class Presentations/tests/assignments 10 Attendance, participation & discipline 10 Maximum Marks 150 The students have to work on individual or group Presentations for which the title will be assigned after the completion of each unit. No topics for project will be assigned after the due date. Failure to meet this deadline will result in a penalty of 2 marks. No excuses will be accepted. Only the 10 best Projects will be allowed for presentation and these projects will be rewarded with 2 marks. Attendance is mandatory during the presentations; failure to attend will result in penalty of 2 marks. Lecture TOPICS COVERED No. UNIT :1 Introduction to finance, introduction to fianacial 1
management, scope and objectives of finance Key decision areas of finance, Objectives of financial management: profit vs wealth maximisation Functions of financial manager, Agency problems: Manager vs Shareholder.

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Time preferenc eof money, Future values of single cash flow and annuity Present values of single cash flow and annuity, Multi-period compounding Return on a single asset and Portfolio. Concept of Risk, Tradeoff between Risk and Return Various techniques of calculating Risk: Variance and Standard deviation Sensitivity Analysis, Probability analysis etc. UNIT:2 Introduction to project and project appraisal, concept of capital budgeting

SUGGESTED READING Financial Management by Khan and Jain Fundamentals of Financial Management by Prasanna Chandra Financial Management by I M Pandey Financial Management R P Rustagi

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Rational behind capital budgeting, Data requirement for Capital Budgeting Tecniques of capital Budgeting, ARR, Pay Back Period Method Differentiation Between ARR and Pay back period Discounting Techniques of Capital Budgeting, NPV and IRR Risk and uncertainity associated Techniques of Capital Budgeting: Probability and Sensitivity analysis of capital Budgeting. Leverage analysis, Concept of EBIT and EPS. Effect of fixed cost on EBIT and EPS, Operating Leverage Degree of Operating Leverage, Calculation Of Leverage Financial Leverage, Degree of financial leverage, Calculation of Financial Leverage Combined Leverage, EBIT-EPS analysis. Practical implications of leverage, Indifference point UNIT III Long term sources of finance: Shares, Types of shares, divident issues Debentures: Types of debentures. Bonds: Types of Bonds Difference between various sources of finance Capital Structure: concepts, approaches of capital sructure decision Net Income Approach: Implications and its effect on the value of company Net Operating Income Approach: Implications and its effect on the value of Company Modigliani Approach: Implicatons nad effect on the value. Cost of Capital Calculation of the Cost of Preference shares Calculation of the cost of Equity shares. Calculation of the cost of Debetures and Bonds, Concept of retained earnings and calculation of weighted average cost of capital

Financial Management by Khan and Jain Fundamentals of Financial Management by Prasanna Chandra Financial Management by Knott G Financial Management by Ravi M. Kishor

Financial Management and Policy by Van Horne Principles of Managerial Finance by Lawrence J. Gitman Corporate Finance Theory & Practice by Damodaran Financial Management by Khan and Jain

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UNIT IV Ploughing back of profits: implications and effects of retained earnings on the value Relevance and Irrelevance of Divident payment: Theories Walter,s, Gordon's and Modigliani Model of Divident payment Factors affecting Divident decisions and effects on the valuation of company Working capital management: Types of working capital: determinants Concept of cash managent: cash mangement techniques and Strategies Inventory management: ABC analysis, EOQ, ZED Working capital financing, Sources of working capital finacing: factoring, Government policies regarding different sources of finance

Financial Management by Khan and Jain Fundamentals of Financial Management by Prasanna Chandra Financial Management by I M Pandey Financial Management R P Rustagi