Topics to be discussed

Introduction to Financial Management

Unit 1

Nature and scope of Financial Management, Finance functions

Role of finance manager, Financial goal: Profit maximization Vs wealth maximization, Concept of
agency and agency problem

Topics to be discussed
Time Preference for money
Future Value- Single Cash flow,
Annuity, Sinking Fund ,Present Value- Single Cash flow
Valuation of Bonds and shares, Risk and Return
Exercises on Future Value, Present Value, and Bonds Valuation
Risk Analysis in Capital Budgeting. Investment Evaluation Criteria
Unit 2

NPV based numerical

IRR: Concept, Limitations and its significance
Payback: Meaning, and calculating payback periods
ARR: Meaning, Scope, and calculating ARR
Profitability Index: Meaning, Nature, Significance, and functions. How to calculate PI
Practical exercises having calculation of various capital budgeting decisions collectively like NPV,
PI and PB simultaneously etc.

Topics to be discussed
Cost of capital: Concept, Significance, nature, and factors affecting cost of
capital
Cost of Debt, Preference Shares, Equity Shares,
Weighted Average Cost of Capital(WACC),
Unit 3

Theories of Capital structure

Net Income(NI)Traditional, Net Operating Income(NOI) Approach
MM Hypothesis,
EBIT-EPS Analysis
Leverage analysis- Operating, Financial and Combined Leverage

Topics to be discussed
Dividend: Concept, meaning, types, and significance for stakeholders
Unit 4

Theories/Models in dividend policy

Walter, Gordon
MM (Miller Modigliani) Hypothesis and theory,
 Determinants of dividend policy.

Topics to be discussed
Working Capital Management: Concept, meaning, objectives, types and
significance
Principles of working capital management,
Receivables Management.
Unit 5

Inventory Management- EOQ, Reorder Level,

Cash Management
Working Capital Finance
Derivatives: Concept, meaning, objectives, and applications
Derivative as tool for managing risk