VIT Course File

2010-11 3rd Trimester

UNIVERSITY
(Estd. u/s 3 of UGC Act 1956)

COURSE FILE
Faculty Details

Name of the Faculty : Mr. S. Satya Moorthi

Designation : Assistant Professor

Department : VIT BUSINESS MANAGEMENT

Course Details

Name of the Class : I MBA Batch 1 batch

Branch : MBA Trimester :3

Title of the Subject : Financial Management II S. Code : MBA 626

Type of the Course : Core Paper No. of Students : 40 approx

Brief Objective of the : To develop a thorough understanding of the role of a corporate financial
Subject manager, in relation to financial decision making process involving investment,
financing, dividend and working capital management.

Performance Target

Details Planned Actual (to be filled after the course

completion)

% of Pass 100

% of First Class 60

Class Average Marks 65

Qualitative Objectives
(if any)
 Financial Management – II
L T P C
3 - - 2
Version No.:
Course Prerequisite: Financial Management – I
Objectives: To develop a through understanding of the role of financial manager in relation to dividend
and liquidity decisions.
Expected Outcome: Knowledge about the dividend, working capital requirements, sources of finance,
lease financing and valuation of firms.
CONTENTS
Unit Description Hours
Dividend: Approaches – determinants – types of dividend policy –effects and objects
1.a of bonus issue – Dividend theories and Models - Walter’s Model, Gordon’s Model and 07
MM approach
Working capital requirements: Meaning - concept – kinds – importance
1.b of adequate working capital - determinants of working capital.- 08
management of cash, receivables and inventory
Sources of Finance: Various sources of raising short term and long term funds – kinds
2.a of ownership securities – internal financing – loan financing – innovative sources of 05
finance
Lease Financing and Hire Purchase: Meaning – types – financial evaluation –
methods of computation lease rentals – economics 0f leasing – meaning and features of
2.b 06
hire purchase – methods of computing instalment under hire purchase – method of
splitting HP, instalment – leasing Vs. HP
Valuation of Firms: Need for Valuation – Different Approaches – Asset Based
2.c 04
Approach – Earnings Based Approach – Cash Flow Approach
Text Books
1. Shashi K. Gupta, R.K. Sharma, (2006), Financial Management , Kalyani Publishers, Mumbai
Reference Books:
1. I.M. Pandey, (2005), Financial Management , Ninth Edition., Vikas publishing house Pvt ltd.,
New Delhi.
2. Khan and Jain , (2006), Financial Management, Tata McGraw Hill, New Delhi.
Mode of Evaluation: Mid Term, End Term and any of these following components Mini
Projects / Seminars / Quizzes(announced and / or unannounced case analysis and case
discussion / Term Paper Class Participation / Assessment of Class Notes etc
Recommended by the Board of Studies on:
Date of Approval by the Academic Council:
 TEACHING PLAN

Session Topic Resource / Material

1 Sources of Finance Overview of Long-term Sources

2 Retained earnings; Equity capital Chapter 21
3 Equity capital Chapter 22
4 Debt and Term Loans Chapter 23
5 Other innovative methods Chapter 24
6 Case & Exercise Hand-outs
7 Short-term sources – features; Chapter 17 & Hand-outs
trade credit
8 Bank credit & bill discounting Chapter 17 & Hand-outs
9 Lease Financing Chapter 25
10 Hire purchase Finance Chapter 25
11 Venture Capital Financing Chapter 26
12 Case & Exercise Hand-outs
13 Working Capital Overview Chapter 13
Management
14 Cash & Liquidity Management Chapter 14
15 Receivables Management Chapter 15
16 Inventory Management Chapter 16
17 Working Capital Financing Chapter 17
18 Case & Exercise Hand-outs
19 Case & Exercise Hand-outs
20 Dividend Decisions Dividend Policy Chapter 31
21 Determinants of Dividend Policy Chapter 31
22 MM Model Chapter 30
23 Walter’s Model Chapter 30
24 Gordon’s Approach Chapter 30
25 Exercise Chapter 30
26 Valuation of Firms Framework of Valuation Chapter 32
27 Methods of Valuation Chapter 32
28 Exercise Chapter 32
29 Exercise Chapter 32
30 Summary & Revision

Actual Date of Completion of the Unit and Remarks:

Signature of the PG Coordinator Signature of the Faculty

 TEACHING PEDAGOGY

Combination of lectures (aided by ppts), case / live examples, numerical problems, and
assignments & presentations by students.

Text Book:
1. . Khan and Jain, (2007), Financial Management, 5th ed., Tata McGraw Hill, New Delhi.

Reference Books:
2. Prasanna Chandra, Financial Management, 7th ed, Tata McGraw Hill, New Delhi.
3. I.M. Pandey, (2005), Financial Management, 9th ed., Vikas Publishing House, New Delhi.

Additional Resources:
Financial dailies (Economic Times & Business Line) and selected web resources.

EVALUATION PLAN

1. MID TERM EXAM 20 %

2. INTERNAL MARKS 40 %
Comprising of:
a. Class Participation
b. Case Presentation
c. Regular Assignments
d. Surprise Quizzes

3. FINAL EXAMINATION 40 %