Financial Management (BBA)
Teacher
Debi Prasad Satapathy
Category
Core Courses
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Code(Credit) : CUTM1219(4-0-2)
Course Objectives
To acquaint students with the techniques of financial management and their applications for business decision making.
Learning Outcomes
It focuses on graduating students with in-depth knowledge of corporate finance, investment management, financial risk management and corporate evaluation. apply appropriate methods and analytical procedures to conduct analysis of practical financial problems and propose valid solutions based on this analysis.
Course Syllabus
Module I
Nature of Financial Management: Finance and related disciplines; Scope of Financial Management; Profit Maximization, Wealth Maximization - Traditional and Modern Approach; Functions of finance – Finance Decision, Investment Decision, Dividend Decision; Objectives of Financial Management; Organisation of finance function; Concept of Time Value of Money, present value, future value, and annuity; Risk & Return: Historical return, expected return, absolute return, holding period return, annualized return, arithmetic & geometric return; Risk - Systematic & unsystematic risk – their sources and measures.
Module II
Long -term investment decisions: Capital Budgeting - Principles and Techniques; Nature and meaning of capital budgeting; Estimation of relevant cash flows and terminal value; Evaluation techniques - Accounting Rate of Return, Net Present Value, Internal Rate of Return & MIRR, Net Terminal Value, Profitably Index Method. Concept and Measurement of Cost of Capital: Explicit and Implicit costs; Measurement of cost of capital; Cost of debt; Cost of perpetual debt; Cost of Equity Share; Cost of Preference Share; Cost of Retained Earning; Computation of over-all cost of capital based on Historical and Market weights.
Module III
Capital Structures: Approaches to Capital Structure Theories - Net Income approach, Net Operating Income approach, Modigliani-Miller (MM) approach, Traditional approach, Capital Structure and Financial Distress, Trade-Off Theory. Dividend Policy Decision - Dividend and Capital; The irrelevance of dividends: General, MM hypothesis; Relevance of dividends: Walter's model, Gordon's model; Leverage Analysis: Operating and Financial Leverage; EBIT -EPS analysis; Combined leverage.
Module IV
Working Capital Management: Management of Cash - Preparation of Cash Budgets (Receipts and Payment Method only); Cash management technique, Receivables Management – Objectives; Credit Policy, Cash Discount, Debtors Outstanding and Ageing Analysis; Costs - Collection Cost, Capital Cost, Default Cost, Delinquency Cost, Inventory Management (Very Briefly) - ABC Analysis; Minimum Level; Maximum Level; Reorder Level; Safety Stock; EOQ, Determination of Working Capital.
Text Books:
- Dr Prasanna Chandra – Tata Mc Graw-Hill
Reference Books:
- I M Pandey –Tata McGraw-Hill
- Brealey and Meyers: Principles of Corporate Finance: Tata McGraw Hill, New Delhi, 2008.
- Keown, Martin, Petty and Scott (Jr): Financial Management: Principles and Applications; Prentice Hall of India, New Delhi, 2002.
Session Plan
Session 1
Nature and scope of Financial Management-Role of Finance Manager Interdisciplinary aspects of Financial Management
Session 3
Know various Financial Management Decisions and their risk-return trade off
Session 4
Meaning of Time Value of Money (TVM), The motives behind TVM, How to calculate the Present value and the Future value using the discounting and
compounding.
Session 5
The difference between Nominal and Effective rate of interest.
Session 6
The Concepts of Return- Measuring the Rate of Return
Session 8
Learn the different techniques available for measuring risk and returns.
Session 13
Appraisal Criteria: Discounted and Non-Discounted Methods
Session 14
Appraisal Criteria: -Pay –Back Period
Session 15
Appraisal Criteria: - Accounting Rate of Return
https://corporatefinanceinstitute.com/resources/knowledge/accounting/arr-accounting-rate-of-return/
https://www.youtube.com/watch?v=n_a_0PpxD3Q
Session 19
Modified Internal Rate of Return (MIRR) Method
https://corporatefinanceinstitute.com/resources/excel/study/mirr-guide/
Session 20
The Meaning of Cost of Capital-Cost of Different Sources of Finance- Concept and Importance
https://corporatefinanceinstitute.com/resources/knowledge/finance/cost-of-capital/
Session 22
Cost of Preference share
https://www.youtube.com/watch?v=n0wWegks4C
https://efinancemanagement.com/investment-decisions/cost-of-preference-share-capital
Session 22
Cost of Preference share
https://www.youtube.com/watch?v=n0wWegks4C
https://efinancemanagement.com/investment-decisions/cost-of-preference-share-capital
Session 28
Net Operating Income Approach
Session 30
Modigliani - Miller ( MM) approach
https://www.youtube.com/watch?v=15pg171Tqqk
https://xplaind.com/161503/modigliani-and-miller-mm-approach
https://corporatefinanceinstitute.com/resources/knowledge/finance/mm-theorem/
Session 31
Problem on Capital structure
https://noteslearning.com/solved-numerical-problems-capital-structure-approaches/
Session 33
Gordon Valuation Model
https://www.youtube.com/watch?v=gX-7xxq2sOY
https://efinancemanagement.com/dividend-decisions/gordons-theory-on-dividend-policy
Case Studies
Case Studies
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 […]