Corporate Finance
Teacher
Debi Prasad Satapathy
Category
Core Courses
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Course Name : Corporate Finance
Code(Credit) : CUTM1204(3-0-1)
Course Objectives
- Developing skills for preparation and interpretation of business information apart from application of financial theory in investment decisions, with special emphasis on capital structure, Capital Budgeting and other concepts.
Course Outcomes
| COS | COURSE OUTCOMES | MAPPING COS WITH POS (High-3; Medium-2; Low-1) |
| CO1 | Apply the financial skill on raising and application of funds for future decision making. |
PO1(3), PO3(2)
|
| CO2 | Able to apply the techniques of TVM and capital budgeting for investment decision making. |
PO2(3), PO3(3)
|
| CO3 | Analyse the business with the theories of financial management for framing optimum capital structure, distribution of profir and managing the working capital. | PO1(3), PO2(3)
|
Module I
We will address in this module the concept of financial management its scope objective and emerging role of finance manager and the application of time value of money for decision making in finance. We will also address the risk and return prospective of some Indian companies.
1. Scope of Financial Management; Objectives of Financial Management
2. Role of Finance manager
3. Time Value of Money
4. Conceptual Framework of Risk and Return
Module II
We will address in this module the how companies decide to make investment by taking both discounting and non-discounting technique. The module will address to calculate the IRR and NPV by taking some data of Projects. the Course by the discussion of criteria of choosing investment projects. Beside NPV, the internal rate of return (IRR) and other approaches are introduced. We show why the NPV criterion is the best and why the application of others may lead to wrong investment decisions. Then we focus on the main ideas to be taken into account while setting up cash flow patterns and making the choice of project on the basis of NPV. We mention some special issues – relevant costs, depreciation, inflation.
1. Nature of Capital Budgeting
2. identifying Relevant Cash Flows
3. Investment Evaluation Techniques: DCF and Non-DCF Techniques
4. NPV vs. IRR
5. Importance and concept of cost of capital
6. Cost of debt, Cost of Preference share, Cost of Equity, Overall WACC
Module III
In this module you will learn how companies decide on how much debt to take, and whether to raise capital from markets or from any other sources. Understand how companies make financing, pay-out and risk management decisions that create value. Measure the effects of leverage on profitability, risk, and valuation.
1. Capital Structure Theories concept
2. NI Approach
3. NOI approach
4. MM approach
5. Operating, Financial and Combined Leverage
Module IV
In this module how company’s dividend decision affects the firm value. We will discuss the concept of stock dividend, share repurchase, and stock split decision affecting the shareholder wealth. It will address the concept of liquidity and profitability through working capital management.
1. Concept of Dividend
2. Cash dividend and Bonus Share
3. Share repurchase and stock spilt
4. Irrelevance of Dividends; and Relevance of Dividends
5. Concept of Working Capital
Text Books:
1. Dr Prasanna Chandra – Tata Mc Graw-Hill
Reference Books:
1. I M Pandey –Tata McGraw-Hill
2. Brealey and Meyers: Principles of Corporate Finance: Tata McGraw Hill, New Delhi, 2008.
3. Keown, Martin, Petty and Scott (Jr): Financial Management: Principles and Applications; Prentice Hall of India, New Delhi, 2002.
Session-1
Nature and scope of Financial Management -Role of Finance Manager Interdisciplinary aspects of Financial Management
Nature and scope of Financial Management pdf
adddtional reading
Session-2
Financial Management Decisions
Session-3
Techniques of Time Value of Money
Session-4
Applications of TVM
Nominal and Effective rate of interest
Session-5
The Concepts of Return- Measuring the Rate of Return- Risk.
Session-7
Nature of Investment Decisions-The Process of Capital Budgeting
Session-8
Appraisal Criteria: Discounted and Non-Discounted Methods -Pay –Back Period- Average Rate of Return
Session-13
The Meaning of Cost of Capital-Cost of Different Sources of Finance- Concept and Importance
Session-15
Calculation of Cost of Preference Share Capital
Session-16
Calculation of Weighted Average Cost of Capital- Weighted Marginal Cost of Capital Schedule
Session-30
Estimation of working capital of Working Capital Management
Case Studies
https://www.allfinancejournal.com/article/view/5/1-1-5#:~:text=behind%20this%20concept-,1.,opportunity%20cost%20of%20lost%20earnings.
https://www.researchgate.net/publication/348994450_A_study_on_Risk_and_Return_and_their_relation_in_various_investments
https://www.jetir.org/papers/JETIR2010294.pdf
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2444026
https://www.iosrjournals.org/iosr-jbm/papers/ies-mcrc-icscm/Part%203/26.pdf
Project
Sl. No. Live Project Concept
1 Visit a bank, take some cases of fixed deposit accounts, cash certificates, recurring deposits. Etc., and calculate PV and FV of cash flows. Time value of money
2 Visit the nearest Bank/Retail finance institution and find out the:
Calculation of the EMI for products like personal loan, car loan, housing loan etc.
Find out the implied interest rate for some of the loan accounts, where EMI has been fixed. Time Value of money and ascertaining repayment capacity
3 Visit the nearest stock broking firm/company, take out the investment portfolio of any 5 to 10 clients and find out:
a) The Expected rate of return
b) The risk associated with the portfolio. Risk and Return associated with securities
4 Visit a Financial Institution and from its portfolio of Bond/Debentures take out 5 to 10 cases and find out:
a) The YTM
b) Present value. Valuation of securities
5 An analysis of Weighted Average Cost of Capital of a firm: Use of different sources of finance and their weights, in the overall cost of capital and their implications on the value of the firm. Cost of Capital
6 A study on selection of a project using discounted cash flow technique:
Study the application of various discounted cash flow technique. Capital Expenditure Decision
Our Main Teachers
Dr. Satapathy is Assistant Professor (Finance and Accounting) at CUTM. He holds a master’s degree in finance and control from Utkal university. He also has completed doctoral level fellow programme in management from NIFM Faridabad. He has more than 11 Years of teaching, training and research experience. He has worked at VIT university Bhopal and […]
Financial Market and Services, Investment Management, Secondary Market, Mutual fund