1. 2011-2013 (Trimester III)
MS 622 – Financial Management
Instructors
S.Panboli & N.Anuradha
Introduction
The primary purpose of a business firm is to produce and distribute goods and services to
the society in which it exists. Finance is required for all these activities. The efficiency of
production, personnel and marketing operations is directly influenced by the manner in
which the finance function of the enterprise is performed by the finance personnel. Thus
it may be stated that all the functions or activities of the business are ultimately related to
finance function. The success of the business depends upon how best these functions can
be coordinated.
Financial management is the managerial activity concerned with planning and controlling
of financial resources. It is concerned with efficient use of economic resources namely
capital funds. The main concern of financial management is the wise allocation of funds
to various uses. It is viewed as an integral part of overall management.
Objectives
More specifically the course would focus on
• Introduction to Financial Management
• Investment Decisions
• Financing Decisions – Cost of Capital
• Leverages
• Liquidity decisions
Pedagogy
This course is of analytical in nature. Problems will be handled in each unit. Students will
be given individual assignments in the form of problems to be solved and cases to be
analyzed. This will help them to get an in-depth knowledge in the course. Assignments
must be submitted on the date specified then and there. Late submission won’t be
entertained.
2. Grading Scheme
Final Grade in the course would consist of following components:
Components Weightage
Assessment tests 30%
Assignment, 20%
presentations & Spot
tests.
End term exam 50%
Total 100%
Text Books
T1 – I M Pandey, “Financial Management”, Vikas Publishing House Pvt. Ltd., 2003
T2 – Dr.S.N.Maheshwari, “Financial Management – Principles and Practice”, Sultan
Chand and Sons, New Delhi, 2004.
Reference Books
R1 – Prasanna Chandra, “Financial Management – Theory and Practice”, Tata McGraw
Hil Publishing Company Ltd., 2004.
R2 – M.Y.Khan and P.K.Jain, “Financial Management – Text, Problems and Cases”,
Tata McGraw Hil Publishing Company Ltd., 2004.
R3 – Aswat Damodaran, “Corporate Finance Theory and Practice”, John Wiley and Sons,
2000.
Course Outline
Sess.
Unit Topics Reading Material
No.
Financial Management – Meaning, Definition,
1-2 I T1, Chapter 1
Objectives, Scope and Functions, Financial System
3 II Capital Budgeting – Meaning and Importance T1, Chapter 8
4 II Pay Back Period Method T1, Chapter 8
5 II Accounting Rate of Return Method T1, Chapter 8
6-9 II Net Present Value Method and Profitability Index T1, Chapter 8
10-11 II Internal Rate of Return T1, Chapter 8
3. Sess.
Unit Topics Reading Material
No.
12 II Capital Rationing T1, Chapter 8
13 III Cost of Capital – Meaning and Importance T1, Chapter 9
Cost of Equity Capital, Cost of Preference Capital,
14-20 III Cost of Debt Capital Before Tax and After Tax, Cost T1, Chapter 9
of Retained Earnings
Weighted Average Cost of Capital using Book Value
21-22 III T1, Chapter 9
and Market Value as Weights
Financial Leverages – EBIT-EPS Calculation for
23-24 IV T1, Chapter 14
different Capital Structure
25-26 IV Operating Leverage – Combined Leverage T1, Chapter 14
Working capital management – Meaning – Concepts
– Need – Determinants. T1, Chapter 27
27-28 V
Cash Management – Meaning of cash – Motives of T1, Chapter 30
holding cash
Receivables Management and Inventory T1, Chapter 28
29-30 V
Management – Meaning and Importance T1, Chapter 29
