Course Code:

Course Title

FIN 03 C

CORPORATE FINANCE I
TERM: II
Credit: 3

Classification:

Objective:

Learning
Outcomes

Inputs from

Course

NA
This course aims to provide students with a thorough understanding of the
basic concepts, analytical techniques and practical applications of concepts in
financing decision and working capital management.
By the end of this course students should be able to:
1. Describe various functions of finance in an organization.
2. Identify various long and short term sources of funds.
3. Evaluate the application of time value of money in making financial
decision.
4. Calculate the cost of capital
5. Describe working capital policies and estimate working capital
requirement of an organization.
Output to:
NA
NA
Module 1: 2 Credits

Contents:

Overview of Financial Management Scope of Corporate Finance,

Overview of Financial Markets Financial instruments-common stock, debt
and convertibles. Introduction to financial markets and institutions, Role of
SEBI, Stock Exchanges and Related Institutions, Sources of Long term
financing & Raising of long term finance, Short term financing; ADR, GDR,
ECB and FCCB. Time value of money elaborate, Introduction, types of
cash-flows, future values of single cash flow, multiple cash flows and
annuity; Present value of single cash flows, multiple flows and annuity. Cost
of capital Relevance and computation for each source of finance and
weighted average cost of capital. Risk and return relationship, Use of Capital
Asset Pricing Model to calculate expected returns. Measuring Betas; Capital
structure theories, Impact of inclusion of Debt on the Firm Value (Tax
Advantage vs Financial Distress and Agency cost), Case study in Capital
structure.
Module 2: 1 Credit
Working capital management- Approaches; Aggressive vs Conservative,
Factors affecting working capital requirements, Working Capital Estimation,
Receivables Management, Credit Policy, Cash Management, Management of
Payables, Forecasting Cash Requirements, Sources of Working capital
financing. Cash flow analysis
References:

1. Prasanna Chandra (2006) Financial Management Theory and Practice

(6th Edition) Tata Mcgraw-Hill Publishing Company Limited, New
Delhi

2.Brealey R.A and S.C.Myers (2005) Principles of Corporate Finance 9th

edition, Mcgraw-Hill
3.Pandey I M (2004) Financial Management, Vikas Publishing House Pvt.
Ltd., New Delhi.
4.Khan & Jain(2000)Basic Financial Management (7th Edition) Tata
Mcgraw-Hill Publishing Company
5.Aswath Damodaran (1999) Applied Corporate Finance John Wiley &
Sons
1. Its a core course

Pedagogy
A variety of learning methods are employed to stimulate interest and meet the differing
needs of students including illustrated presentations, group exercises and discussions,
case studies and practical problem solving exercises. Students are expected to carefully
read all the readings assigned for each class and to actively participate in class discussions.
Method of evaluation

Test
Case
Assignment
End term exam

25 %
5%
20 %
50 %

Text/ References
1.Prasanna Chandra (1999) Financial Management Theory and Practice (5th Edition) Tata
Mcgraw-Hill Publishing Company Limited, New Delhi
2.Brealey R.A and S.C.Myers (1999) Principles of Corporate Finance 6th edition, Mcgraw-Hill
3.Pandey I M (1999) Financial Management, Vikas Publishing House Pvt.Ltd., New Delhi.
4.Khan & Jain(2000)Basic Financial Management (7th Edition) Tata Mcgraw-Hill Publishing
Company
5.Aswath Damodaran (1999) Applied Corporate Finance John Wiley & Sons

Assignment:

Financial performance analysis

Date of submission:
Qualitative analysis using CRISIL frame work: 5th Oct 2012
Ratio analysis
: 15th Oct 2012
Cost of capital
: Within 5 days immediately after
completion of the chapter on cost of capital

CORPORATE FINANCE - I
LESSON PLAN
Session
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Topics to be covered
Introduction to financial management
Scope of corporate finance
Objectives of financial management
Introduction to Financial markets
Introduction to Stock Market
Sources of finance
Time value of money
Discount factors
Cases in time value of money
Cases in time value of money
Cases in time value of money
Cases in time value of money
Cases in time value of money
Introduction to cost of capital
Cost of Capital an introduction
Computation of cost of redeemable debt
Computation of cost of irredeemable debt
Cost of preference shares
Cost of equity
Cost of retained earnings
Overall cost of capital
Stock valuation
Risk analysis
Risk return relationship
Measurement of risk
Introduction to working capital management
Factors affecting working capital
requirements
Receivables management
Illustrations in working capital management
Illustrations in working capital management