K.S.

Rangasamy College of Technology–Autonomous

40 HS 002 Engineering Economics and Financial Accounting
Common to all Branches
Semester Hours / Week Total Credit Maximum Marks
L T P hrs C CA ES Total
V 2 0 0 60 2 50 50 100
 The main objective of this course is to make the Engineering student to know about the
Course
basic of economics, how to organize a business, financial aspects related to business,
Objective(s)
different methods of appraisal of projects and pricing techniques.
At the end of the course, the student will be able to
1. Apply suitable demand forecasting techniques.
2. Appraise the prevailing market structure.
3. Describe forms of business in an organization.
4. To know the various functions of banking.
Course
Outcomes 5. Understand the balance sheet and financial tools.
6. Understand the basic nature of capital budgeting fund flow & cash flow
7. To know the type of cost, pricing.
8. Interpret technical feasibility and economic feasibility.
9. Apply break even analysis in engineering projects.
10. Summarize the managerial uses of break even analysis.
Basic Economics
Definition of economics – nature and scope of economics – basic concepts of economics – factors of production
– demand analysis – definition of demand – Law of demand – Exception to law of demand – Factors affecting
demand – elasticity of demand – demand forecasting – definition of supply – factors affecting supply – elasticity
of supply – market structure – perfect competition – imperfect competition - monopoly – duopoly – oligopoly and
bilateral monopoly .
Organization and Business Financing
Forms of business – proprietorship – partnership - joint stock company - cooperative organization - state
Enterprise - mixed economy - Money and banking – kinds of banking - commercial banks - central banking
functions - control of credit - monetary policy - credit instrument – Types of financing - Short term borrowing -
Long term borrowing - Internal generation of funds - External commercial borrowings - Assistance from
government budgeting support and international finance corporations.
Financial Accounting and Capital Budgeting
The balance Sheet and related concepts – The profit and loss statement and related concepts – Financial ratio
analysis – Cash flow analysis – fund flow analysis – Capital budgeting– Average rate of return – Payback period
– Net present value and internal rate of return.
Cost Analysis
Types of costing – traditional costing approach - activity based costing - Fixed Cost – variable cost – marginal
cost – cost output relationship in the short run and in long run – pricing practice – full cost pricing – marginal cost
pricing – going rate pricing – bid pricing – pricing for a rate of return – appraising project profitability - cost
benefit analysis – feasibility reports – appraisal process – technical feasibility - economic feasibility – financial
feasibility.
Break Even Analysis
Basic assumptions –break even chart – managerial uses of break even analysis - applications of break even
analysis in engineering projects.
Textbook(s):
1. Khan MY and Jain PK., “Financial Management” McGraw - Hill Publishing Co., Ltd., New York, 2000.
2. Varshney RL and Maheshwary KL. “Managerial Economics” S Chand and Co., New Delhi, 2001.
Reference(s):
1. Barthwal R.R., “Industrial Economics - An Introductory” Text Book, New Age Publications, New Delhi, 2001.
2. Samuelson P.A., “Economics - An Introductory Analysis”, McGraw - Hill & Co., New York, 2000.
3. S.K.Bhattacharyya, John Deardon and Y.M.Koppikar, “Accounting for Management Text and Cases”,
V.L.Mote,
4. Vikas SamuelHouse
Publishing and G.S.Gupta,
Pvt Ltd., New Delhi – 110002,
“Managerial Economics – Concepts and Cases”, Tata Mcgraw Hill
1984.
Publishing Company Ltd., New Delhi – 110002, 1981.