Fundamentals of Finance

Concept of finance; Finance functions, The financial goal; Finance in organizational structure; Finance and related disciplines.

Overview of financial environment; Financial instruments, Financial markets: Functions and types of financial markets; Financial institutions: Depository and non- depository financial institutions.

Financial statements and reports; Concept of financial statement analysis; Users off inancial analysis; Tools of financial statements analysis; Need of financial ratio analysis; Types of financial ratios: liquidity ratios, asset management ratios debtmanagement ratios, profitability ratios and market value ratios; Du-Pont equation; Comparative ratios and benchmarking; Uses and limitations of ratio analysis.

The cost of money; Interest rates levels; Determinants of market interest rates; Termstructure of interest rates; Theories of term structure of interest rates; Shape of yieldcurve; Using the yield curve to estimate future interest rates; Macroeconomic factorsinfluencing interest rates; and Interest rate and business decision

Concept of time value of money; Cash flow time line; Future values and presentvalues of a single cash flow; Computing the interest rate and the number of years; Future value and present value of an ordinary annuity and annuity due; Computingannuity payments, periods and interest rates; Present value of perpetuities; Presentvalue and future value of uneven cash flows; Semiannual and other compoundingperiods; Preparation of loan amortization schedule; Application of the concept of time value of money

Meaning and key characteristics of bonds, Basic financial asset valuation model,Valuation of bonds: perpetual bonds, zero coupon bonds, coupon bonds with finite maturity, Bonds with semiannual coupons, required return and bond values, Changesin bond values over time, Bond yields: current yield, capital gain yield, yield to maturity and yield to call.

Meaning and key features of common stock, Common stock valuation: single andmultiple holding periods, The dividend discount model: zero growth model, normal growth model, non-constant growth model, valuing the entire firm, Preferred stock:Features and valuation.

Concepts and uses of cost of capital, Components of cost of capital: cost of debt, costof preferred stock, cost of retained earnings, cost of new common stock, weightedaverage cost of capital; Factors affecting cost of capital.

Concepts of working capital; Types of working capital; Factors affecting the size ofworking capital; Working capital management and its significance; Operating cycle,cash conversion cycle and computing the amount of working capital requirement.