Subject Code: FIN 207
Course Title: Financial Management
Course No: FIN 207
Nature of Course: Theory & Practical
Full Marks: 100
Pass Marks: 40
Credit Hours: 3
Unit 1: Introduction 4 LHs
Concept and scope of financial management; Financial management decisions; Financialmanager’s responsibility; Forms of organizations; The agency problem; Business ethicsand social responsibility; Financial innovations
Unit 2: Financial Planning and Forecasting 6 LHs
Concept of financial planning and forecasting; Strategic plan; Operating plan; Financialplan, Sales forecast; The additional fund needed formula; Excess capital adjustments; Forecasted financial statement: forecasted income statement and balance sheet; Usingregression to improve forecast
Unit 3: Capital Budgeting 8 LHs
Concept of capital budgeting decision; Capital budgeting decision process; Types ofcapital budgeting projects; Estimation of cash flows, Capital budgeting decisiontechniques:payback period, discounted payback period, net present value, profitabilityindex, internal rate of return, modified internal rate of return; merits and limitations ofeach capital budgeting decision technique, Replacement decision; Evaluation of projectswith unequal lives
Unit 4: Risk, Return and the Portfolio Theory 6 LHs
Concept and measurement of return and risk, Measurement of rate of return: expectedand average rate of return; Measurement of risk: variance, standard deviation andcoefficient of variations: Measurement of risk and return in portfolio context; Riskdiversification; Minimum variance portfolio; Efficient portfolio; Optimal portfolio;Capital assets pricing model (CAPM)
Unit 5: Capital Structure and leverage 6 LHs
Concept of capital structure; Capital structure issues; Estimating the optimal capitalstructure; Factors affecting capital structure; Business risk and financial risk; Leverage:operating and financial leverage; Degree of operating and financial leverage;Combining operating and financial leverage, Impact of financial leverage; Indifferencecharts; Breakeven analysis: operating, cash and financial BEP
Unit 6: Current Assets Management 7 LHs
Concept of current assets management. Cash management: significance of cashmanagement, motives of holding cash, importance of maintaining adequate cash; Inventory management: significance of inventory management, objectives of holdinginventories, inventory management techniques, inventory control system; Receivablemanagement: significance of receivable management, cost of maintain receivables,elements of credit policy, evaluating proposed changes in credit policy
Unit 7: Dividend policy 5 LHs
Nature and types of dividend policy, Dividend versus capital gain; Dividendirrelevance theory; Bird in the hand theory; Tax preference theory; Factors affectingdividend policy; Stock dividends and stock splits: stock split, stock dividend, effect onstock price, Stock repurchase.
Unit 8: Multinational Financial Management 6 LHs
Nature of multinational corporations; Reasons for companies going global;Multinational versus domestic financial management; Exchange rates quotations;Cross rates; Interbank foreign currency quotations; Trading in foreign exchange rates:spot rates and forward rates; Interest rate parity; Purchasing power parity
Brigham, E. F. & Houston, J. F. Fundamentals of financial management. Delhi: Cengage
Learning.
Ross, S. A., Westerfield, R. W. & Jordan, B. D. Fundamentals of corporate finance. New York:
McGraw-Hill Irwin.
Van Horne, J. C., Wachowicz, J. R. & Bhaduri, S. N. Fundamentals of financial management.
New Delhi: Prentice-Hall India Ltd.
