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Financial management

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  • 1. INSTITUTE OF PROFESSIONAL EDUCATION AND RESEARCH MBA II SEM-2012 COURSE OUTLINE - FINANCIAL MANAGEMENT Faculty In charge Prof. Abhishek Jain&Prof. Deepshikha RajdevCourse Objective:Often said, that finance is the life blood of business. True, as all the activities in the business requires finance.Beit marketing, HR or operations of the business. The utility of proper financial management increases in thisway.The present course outline is designed in such a manner that it fulfills the objective stated. The majorobjectives ofthe course are: • To acquaint the students about the different functions of finance. • To elaborate each finance function and its components. • To establish a relationship between the different functions of finance. • To make the student understand and design the financial management program of any organization/business. • To establish among the students that proper financial management of the business organization is thekey to the success of the business.Course Requirements:The course requires the students to be conceptually well known about the various functions of Accounting.Theissues already covered in their earlier course modules will be addressed and used frequently as and whenrequiredduring the course coverage. The students are required to have a habit of reading one economic orbusiness newspaper of their choice daily. They are also expected to be well read on the basic businessstrategies often practicedin the industry.Teaching Pedagogy:The teaching pedagogy will cover the lecturing in very strong format. The course requires active participationofthe students in the form of discussion, group exercises and their outcome. The learning process will includethediscussion mode on the various issues related to the industry and the market. The assignments mentionedin themodules have a great significance for the understanding of the subject. The course also requires thereadingssuggested in the various modules to discuss in length during the sessions. The students are required togo throughall the readings before every session.Course Outcome:By the end of this course having understood the importance of financial management in an organization studentswill be able to make use of the knowledge and skills they have attained to take major financial managementrelated decisions i.e. investment, financing and dividend. They will also be able to hone their skills in the relatedareas of financial analysis, standard costing and budgetary control.Scheme of Evaluation:Assignment &Quiz: 25%Presentation: 25%Attendance: 25%Term end exam: 25%
  • 2. Text Books:T-1: Financial Management, I M Pandey ,Vikas Publishing House , Ninth Edition.T-2: Financial Management, Khan & Jain, Tata McGraw-Hill , Fifth Edition.T-3: Management Accounting Principles and Practice, R.K.Sharma&Shashi K. Gupta, KalyaniPublishersReference Book :R-1: Financial Management & Policy, James C. Van Horne, Prentice Hall , Twelfth Edition.Module One: Title Financial Management –An Overview. Contents Financial Management –Concept, Overview of Functions and Objectives. Financial Analysis- Statement, Cash Flow, Cost –Volume-Profit Analysis. Text T-1: Chapter 1, 24, 25. T-2: Chapter1, 5, 6, 7. T-3: Chapter 3, 4, 5, 6, 8, 13. References R-1: Chapter 1, 12.Assignment/Q Groups of three students each would be formed and allotted companies from various sectors. The uiz groups will be required to analyze theCash Flow Statement and perform aDu Pont Analysis on the allotted companies. Case Reliance Industry Ltd. (For understating the practical application of the Financial management concept as per the specific module). Group Presentation on : Presentation • Two groups of three students on the Assignment mentioned above • One group of three students on the Second Reading mentioned below • One group of three students on the Current News and Updates related to the module. Readings A Study on the Profitability and Financial Position of Information Technology companies in India during the post liberalization period. ; Dr. N. Sundaram, Dr. S.Sudalaimuthu. Indian Journal Of Finance ; Volume 3 , Number 4 , April 2009 , Pp 19- 26 .
  • 3. The Relationship between EVA, MVA, and Dividend Paid- An empirical study . Dr N R V Ramana Reddy, M. Rajesh; Indian Journal Of Finance ; Volume 2 , Number 7 , Nov 2008 , Pp 38-42. Value Creation in Indian Paper Industry ; An Analysis .; N Sakthivet , Dr.C. Arjuna ; Indian Journal Of Finance ; Volume 3 , Number 12 , December 2009 , Pp 46-54. EVA Discipline getting hotter at HARSCO Corportation. Dr. HimanshuChoudhary ,Vandana Sharma ; Indian Journal Of Finance ;Volume4 ,Number 6 , June 2010 , Pp 12-20. How to read Annual Report, compiled by Dr. A S Khalsa How to make financial projections, compiled by Dr. A S Khalsa Web • http://www.icmrindia.org/free%20resources/casestudies/finance8.htm Resources • http://www.westga.edu/~bquest/2000/dowjones.html • http://www.accountingformanagement.com/horizontal_analysis_or_trend_anal ysis.htm#Ratios Analysis • http://www.futureaccountant.com/funds-flow-cash-flow/ • http://ethesis.nitrkl.ac.in/1953/1/10605038.pdf • http://www.mattdecuir.com/Google/default.aspxNo. Of Hours Total Five Hours: FourHours-Interactive Teaching and One Hour- Presentations.
  • 4. Module Two:- Title Time Value of Money and Capital Budgeting Contents Time Value of Money Concept of Capital Budgeting and its Principles Calculation of Cash Flows Methods of Capital Budgeting: –Traditional Methods, Pay Back Period , ARR, Discounted Cash Flows, NPV, IRR, Profitability Index. Text T-1: Chapter2, 8. T-2: Chapter 2, 9, 10. T-3: Chapter 27.References R-1: Chapter 2, 6.Assignment/ Nil Quiz Case Reliance Industry Ltd. (For understating the practical application of the Financial management concept as per the specific module).Presentation Group Presentation on : • Two groups of three students on the First and Third Readings mentioned below • One group of three students on the Current News and Updates related to the module Readings How Do Cfos Make Capital Budgetingand Capital Structure Decisions? John Graham and Campbell Harvey, Journal Of Applied Corporate Finance Spring 2002. A new approach to Capital budgeting for financial Institutions. by Kenneth A. Froot and Jeremy C. Stein, Journal of Applied Corporate Finance:Volume 11 ,Number 2, Summer 1998 Capital Budgeting Practices of the Fortune 1000: How Have Things Changed? ;Patricia A. Ryan, Glenn P. Ryan ; Journal of Business and Management, Volume 8, Number 4, Winter 2002. Web • http://beginnersinvest.about.com/od/dividendsdrips1/ss/dividends-and-dividend- Resources investing-101_6.htm • http://people.stern.nyu.edu/adamodar/pdfiles/ovhds/ch11.pdf • http://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/dividend.html No. Of Total Eight Hours: Seven Hours-Interactive Teaching and One Hour- Presentations. Hours
  • 5. Module Three: Title Sources of Finance , Cost Of Capital and Capital Structure Contents Sources of Finance. Cost Of Capital and Weighted Average Cost of Capital Capital Structure Concept and Theories – Traditional , Net Income Approach , Net Operating Income approach , MM Hypothesis Optimum Capital Structure Decision. Text T- : Chapter 9, 14, 15, 20, 21, 22, 23. T-2: Chapter 11, 18, 19, 20, 21, 22, 23, 24, 25, 26 T-3: Chapter 16, 17, 18, 19. References R-1: Chapter 4, 8,17.Assignment/Quiz/ The Groups of 3 students each will be made. The groups will be required to study Live Exercise and analyze the capital structure and calculate the cost of capital of thecompanies allotted. Case Reliance Industry Ltd. (For understating the practical application of the Financial management concept as per the specific module) Presentation Group Presentation on : • Two groups of three students each on the Assignment mentioned above • One group of three students on the Eighth Reading mentioned below • One group of three students on the Current News and Updates related to the module. Readings A study of the Impact of Leverage on the Profitability of Indian Banking Industry. ; Dr.S.M. TariZafar& Dr. AdeelMaqbool , International Journal Of Financial Management , Volume 1,Issue 2, April 2011. Impact of Leverage on the Profitability of primary Aluminum Industry in India. ; R Amsaveni ; Indian Journal Of Finance ; Volume 3 , Number 11 , November2009 , Pg 33-41. The Determinants of Debt ownership structure –Some empirical evidence. ; Dr. MalabikaDeo , S. Jackline ; Indian Journal Of Finance ; Volume 3 , Number 1 , January2009 , Pp22-27. Investment Opportunity and Right Equity Issue decision by Indian Firms. JijoLukose P J & Narayan Roa S ; Journal of Managerial Finance & Research ; Volume 6 , Number 1 , Jan-June 2010.
  • 6. The Determinants of Long term Indebtedness in India : A review of Post liberization evidence and unresolved issues.; RajuMajumdar&BhumikaMalhotra ; Journal of Managerial Finance & Research ; Volume 6 , Number 1 , Jan-June 2010 , pp 99-108 Cost of Capital and companies Performance : An interrelationship study of selected Indian Companies. ; BidyuJyotiBhattacharjee ; The IASMS Journal of Business Spectrum ; Volume 5 , Number 1 , Jan2012 , pp 78-90 Empirical Study on Ownership Structure and firm Performance. ; ArunimaHaldar , S V D NageswareRao. Indian Journal of Corporate Governance; Volume 4 , Number 2 , July-Dec 2011 , Pp 27-33. Significant level of Financial Risk on Capital Structure.; Dr.K. Jothi ; Indian Journal Of Finance ; Volume 4 , Number 8 , August 2010 ,Pp 48-55. Factors Affecting the Capital Structure of BSE 100 Indian Firms. ; Dr. SumiKhare , Dr. SaimaRizvi ; Indian Journal Of Finance ; Volume 5 , Number 6 , June 2011 , Pp 20-25. Does a High Leveraged Capital Structure of a firm influence its performance? – A Comparative study of high and low leveraged FMCG companies in India.; ShilpaPeswani ; Indian Journal Of Finance ; Volume 5 , Number 6 , June 2011 ,Pp 3-10. Debt in the Indian Corporate Sector: Its effect on the firm Strategy and Performance. ; Sumit K Majumdar&Kunal Sen. ; Decision, Volume 37 , Number 3 , December 2010. An Analysis of the Capital Structure of the Indian Banks ; Vinimaya ; Volume XXXII, Number 2 , July-September 2011. Capital Structure decision under multiple objectives . A study of Indian Corporate.; Finance India ; Volume XXIV , Number 2 , June 2010, Pp 515.Web Resources • http://www.valuebasedmanagement.net/methods_wacc.html • http://www.egyankosh.ac.in/bitstream/123456789/38354/1/Unit-17.pdf • http://www.expectationsinvesting.com/tutorial8.shtml • http://ocw.mit.edu/courses/sloan-school-of-management/15-414-financial- management-summer-2003/lecture-notes/lec16_capital_structure2.pdfNo. Of Hours Total Ten Hours: Nine Hours-Interactive Teaching and One Hour- Presentations.
  • 7. Module Four:- Title Dividend Decision Contents Dividend Theories – Modigliani and Miller Hypothesis, Walter’s Model, Gordon’s Model. Determinants of Dividend Policy – Bonus Shares and Stock Splits Text T-1 : Chapter 17, 18 T-2: Chapter 30, 31. T-3: Chapter 23. References R-1: Chapter 11.Assignment/Quiz/Li A Comprehensive Quiz on above four modules. ve Exercise Case Reliance Industry Ltd. (For understating the practical application of the Financial management concept as per the specific module). Presentation Group Presentation on : • Two groups of three students on the Second and Fourth Readings mentioned below • Two groups of three students on the Current News and Updates related to the module. Readings Determinants of Dividend Policy in selected Indian Industries : An Empirical Analysis. ; M.Sudhahar ; Indian Journal Of Finance ; Volume 4 , Number 12 , December 2010 , Pp 29-39. Trends and Progress in Corporate Dividend of selected steel companies in India. ; S . Lalitha Mani, S. Priya ; Indian Journal Of Finance ; Volume 4 , Number 12 , December 2010 , Pp 40-45. Determinants of Corporate Dividend Policy.; Amitabh Gupta , CharuBanga ; Decision ; Volume 37 , Number 2 , August 2010 , Pp 63-78. Dilemma of Corporate Action: Empirical Evidences of Bonus Issue vs. Stock Split. ; SrinivasShirur ; Vikalpa , Volume 33 , Number 3 , July – Sertember 2008. Web Resources • http://beginnersinvest.about.com/od/dividendsdrips1/ss/dividends-and- dividend-investing-101_6.htm • http://people.stern.nyu.edu/adamodar/pdfiles/ovhds/ch11.pdf • http://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/dividend.ht ml No. Of Hours Total Three Hours- Two Hours-Interactive Teaching and One Hour-Presentations.
  • 8. Module Five: Title Working Capital Management Contents Overview of Working Capital Management - Receivables - Inventory -Cash Management. Working Capital Finance Text T-1: Chapter 27, 28, 29, 30, 31. T-2: Chapter 13, 14, 15, 16, 17. T-3: Chapter 21, 22. References R-1: Chapter 14, 15, 16.Assignment/Quiz/Liv Group Organization visit to understand the process of working capital estimation and e Exercise financing Case Nil Presentation Five Groups to give Presentation on the process of working capital estimation and financing of the organization visited. Readings Working Capital Analysis of Public Sector Undertaking – A case study of Madhya Pradesh State Electricity Board. ; Dr. S. K. Khatik , Rashmi Jain.; Indian Journal Of Finance ; Volume 3 , Number 5 , May 2009 , Pp 31-37. Methods of Assessment of Working Capital . ; Vinimaya ; Volume XXXII , Number 3 , October-December 2011 , Pp 45-58. Working Capital Management of selected Agriculture firms . A study in Indian Context. Finance India ; Volume XXIV , Number 2 , June 2010, Pp 515. Web Resources • http://www.navigatorpf.com/tutorials/working-capital-%E2%80%93-trade-debtors- and-trade-creditors • http://www.ecofine.com/operations/How%20to%20calculate%20the%20WCR.htm • http://www.planware.org/workingcapital.htm#1 No. Of Hours Total Eight Hours: Seven Hours-Interactive Teaching and one Hour- Presentations.
  • 9. Module Six: Title Standard Costing and Budgetary Control Contents Conceptof Standard costing and Calculations Analysis of Variance analysis. Meaning, Objectives, Advantages and Limitations of Budgetary Control. The various types of Budgets and their Preparation. Zero Based Budgeting. Text T-2 : Chapter 8 T-3: Chapter 10, 11. References NilAssignment/Quiz/ Nil Live Exercise Case Nil Presentation Nil Readings Standard costing:Insights from leading companies.; KPMG in association with CIMA, February 2010. Sales and Production Volume Variances in Standard Costing John Parkinson ;York University, Toronto, Canada; Research in Business and Economics Journal. Web Resources • http://www.futureaccountant.com/standard-costing-variance-analysis/ • http://www.cimaglobal.com/Documents/Thought_leadership_docs /StandardCosting2010Insightsfromcompanies.pdf No. Of Hours Total Six Hours-Interactive Teaching.
  • 10. Modules Summary:Total Hours: 40Total Assignments: 03Total Organization Visit: 01Total Presentations: 01 for each student, total 20.Total Quiz: 01Total Cases: 03Total Lab Exercise: 01