Sohail Sawani

FACULTY

• Sohail Sawani
• 0333-2215585
• 0321-3895318
• sssawani@yahoo.com
 TEXTBOOKS

• Financial Management, Theory & Practice

by Birigham & Micheal C. Ehrharddt
• Fundemental of Financial Management
by James. C.Van Horne
• Handouts/Soft copies of all the chapters in the
course
• Case Studies
PREREQUISITE

• IFA
• FM
• Mathematics
• Intellect
 COURSE OUTLINE

 Overview of Strategic Financial Management

 Financial Statements and Cash Flows
 Performance Evaluation of Companies
 Financial Planning and Forecasting
 Working Capital Management
 Capital Budgeting for Decision Making
 Risk Analysis in Capital Budgeting
 Capital Structure Decision
 Dividend Distribution Policy
 Mergers and Acquisition
PLAN OF STUDIES

• Plan of Studies:
• Lectures
• Solving Case Studies
• Quizzes & Assignments.
• Term Report – Practical Scenario
• Mid-Term Examination
• Final Examination
GRADING PLAN

• Mid Terms : 30%

• Final Exam : 40%
• Quizzes : 10%
• Term Report & Case Pres : 20%
GOOD LUCK!
 WHAT IS FINANCIAL
MANAGEMENT?

The management of the finances of a

business/organization in order to achieve financial
objectives

Concerns the acquisition, financing, and

management of assets with some overall
goal in mind.
• Investment Decisions

• Financing Decisions

• Asset Management Decisions

Strategic financial management refers to study of finance with a long
term view considering the strategic goals of the enterprise. Strategic
Financial Management are those aspect of the overall plan of the
organization that concerns financial managers. This includes different parts
of the business plan, for example marketing and sales plan, production plan,
personnel plan, capital expenditure, etc. These all have financial implications
for the financial managers of an organization.
The objective of the Financial Management is the maximization of
shareholders wealth. To satisfy this objective a company requires a "long
term course of action" and this is where strategy fits in.
Strategic Financial Analysis & Design (SFAD) course is emerged
as a contemporary discipline by a fusion of financial management
and strategic management.

This field involves a blending of the basic conceptual frameworks of

the two disciplines to provide a strategic approach towards the
management of financial resources of an enterprise.

SFM intends to facilitate optimal results in financial implications of

strategic decisions as well as the strategic repercussion of decisions
on financial status of the enterprise over a period of time. Thus,
SFAD is an approach to management that relates financial
techniques, tools, and methodologies to strategic decision making to
have a long-term futuristic perspective on financial well being of the
firm to facilitate growth, sustenance, and competitive edge
consistently.
 CASE STUDY PREPARATION

Case Type:
Solving Data
Discussion
Judgements
 MINI CASE STUDY
ABC company is one of the state of art company dealing in all kinds of Herbal
Extracts. Incorporating in 2010, company initially seen the growth pattern of 30%
to 45% however since last 2 years the company is continuously facing stagnancy
issues and hence company is striving hard to achieve its previous status. The
company PNL ratios depicts the following for Dec 2016:

COGS 60%, Operating Expenses 20%, EBIT 20% .

(EBIT was Rs 200,000 which represents 20% of 2016 sales).

As a revival strategy the company took the following steps:

• Took the agency of IV leaf Extract from FTC Italy which will increase sale by 30%

• It is suggested to have Agreement with 2 renowned pharmaceutical company's to increase business for which the
require to deposit amounts of Rs 1 Million. The anticipated business will be Rs 0.5m per month.

Required: a) Prepare the forecasted Income statement for year 2017.

b) Critically evaluate the decision of agreement with Pharma Co if bank rate of interest is 12% per
annum

c) What are the other possible business options company can explore to revive previous growth rate.
 MINI CASE STUDY

XYZ company dealing in electronic equipment's situated in one of the remoted

area of Karachi. They sell equipment on installment bases and collect dues from its
customer via door to door. They have employed 20 collection officer for Karachi
region whom collect installments from Mon till Friday. All Officers deposit cash
once in a week i.e. Friday.The annual turnover of Company is PKR 52 Million.

Required: a) Critically analyze the company policy of cash Collection.

b) If Collection officers banks the cash on daily basis the average expense
will be Rs. 100 per day. Evaluate the proposal if the bank rate of
interest is 9% per annum.
c) What are the other measure company should take to mitigate the risk.
 MINI CASE STUDY

ABC company manufactures and sells IT equipment's since last ten years. Unfortunately due to
short circuit the Head Office caught fire and all the soft and hard documents damaged due to
fire. However the company retains few vital data which are as follows:

Description 2014 2015 2016

COGS 768,000 900,000 980,000
GP % on sales 36 33.33 30
Tax % 50 50 50
% Net Income after 6 7 12
Tax (sales)

Required: a) Prepare the Income statement for year 2014 - 2016.

b) Suggest the preventive measure company should adopt to overcome the above issues in future.
c) Comment on company's performance for the past 3 years.
A newly incorporated company plans to introduce a new product. Sales volumes, along
with selling price and variable costs per unit have been estimated as follows:

Sales (in units) Selling price Variable costs

( Rs ) ( Rs )
2,500 9.50 6.000
5,000 9.00 5.750
7,500 8.50 5.625
10,000 8.00 5.000
12,500 7.00 4.875
15,000 6.00 4.875
17,500 5.00 4.875
20,000 4.00 4.875
Fixed costs directly traceable to the new product are expected to be Rs 20,000 for any
volume up to and including 10,000 units. Above that volume, fixed costs would increase to
Rs. 30,000. You are required to ascertain the price at which the company should introduce
this new product if it wishes to maximize its short-run profit on the product.