Financial Management

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Course Contents

Unit 1: Evolution, Scope and Functions of Finance Managers-  Introduction;  Scope of Finance; Financial Management System; Finance Functions ; Role of a Finance Manager

Unit 2: Objectives of a Firm – Introduction;  Profit Maximization; Shareholders’ Wealth Maximization (SWM)

Unit 3: Financial Planning – Introduction; Meaning of Budget; Types of Budgets; Advantages of Budgeting;  Responsibility Accounting

Unit 4: Time Value of Money -  Introduction; Concept of Time Value of Money; Compounding Method ; Discounting Method

Unit 5: Cost of Capital – Introduction; Cost of Capital; Cost of Debt;  Cost of Preference Capital;  Cost of Equity Capital; Approaches to Derive Cost of Equity;  Weighted Average Cost of Capital and Weighted Marginal Cost of Capital

Unit 6: Financial and Operating Leverage – Introduction; Meaning of Financial Leverage;  Measures of Financial Leverage;  Calculation of Earnings Per Share (EPS) and Return on Equity (ROE) ; Financial and Operating Leverages

Unit 7: Capital Budgeting Decisions- Introduction;  Capital Budgeting Process ; Methods to Evaluate Investment Proposals ; Capital Rationing

Unit 8: Capital Structure Theories - Introduction;  Relevance of Capital Structure Theories ; Irrelevance of Capital Structure

Unit 9: Sources of Finance - Introduction;   Short-term Finance ;Long-term Funds

Unit 10: Asset-Based Financing – Introduction;  Lease Financing;  Hire Purchase Financing; Infrastructure Project Financing

Unit 11: Dividend Policy – Introduction;  Dividend Policy;  Financing and Dividend Decision; Dividend Relevance: Walter’s Model

Unit 12: Working capital Management: Introduction; Concepts of Working Capital ;

Operating Cycle Method

Unit 13: Management of Cash – Introduction ; Motives for Holding Cash; Facets of Cash Management;  Cash Planning;  Cash Forecasting and Budgeting; Determining the Optimum Cash Balance ; Investing Surplus Cash in Marketable Securities

Unit 14: Credit Policy: Nature and Goals ;Collection Procedures ; Nature of Inventory

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