This document outlines the course plan for a Financial Management course offered at Mekelle University. The 2-credit hour course aims to familiarize students with basic concepts of financial management and techniques for optimal investment and financing decisions. It will cover topics such as financial statement analysis, capital budgeting, capital structure, and working capital management. The course will be taught through lectures, assignments, presentations and include a final exam. Student assessment will be based on assignments, presentations, quizzes, and a final exam.

1. pCOURSE PLAN
Academic Year: 2012/13 Semester: I
COURSE TITLE: Financial Management (MBA-521)
INSTITUTION: Mekelle University
College of Business and Economics
Department of Business Management
CREDIT HOURS: 2 Hrs
INSTRUCTOR(S): Mr. Assefa Worede
Dr. Suresh Vadde
COURSE DESCRIPTION AND OBJECTIVE
The course provides an introduction to corporate financial management. The course aims at
familiarizing students with the basics of financial management. It is designed to introduce
students to the concepts and techniques necessary to analyze and implement optimal investment
and financing decisions by firms.
The course focuses on the role of the finance function in the firm and how financial decisions by
management create value. It studies the nature of capital markets and related institutions and
selected techniques of financial analysis, including capital budgeting, discounted cash flow
valuation and risk analysis.
GOALS OF THE COURSE
To show finance’s role and function in the firm and how astute financial management can create
wealth. Specifically, to look at how the firm’s interaction with capital markets can maintain or
increase shareholder wealth through capital budgeting, capital structure and payout policy.
TEACHING METHODOLOGY
The course delivery methodology is designed to be student-centered in order to empower the
students and make them participate and active in the teaching-learning process. Besides, the
course assessment is continuous assessment and having one final examination. The details are as
follows:
 Lecture session
 Group/Individual assignments
 Group/Individual presentations
 Quizzes
 Final examination
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2. S.NO. CHAPTER NAME BUDGETED
TIME
CHAPTER-I INTRODUCTION TO FINANCIAL
MANAGEMENT
Objective
After studying this chapter, you should be able to understand the definition 4 Hrs.
of financial management, basic principles, functions, financial decision
making, objectives/goals, factors influencing financial decisions, financial
management and other areas of study and also financial environment.
1.1 Introduction
1.2 Basic Principles of Financial Management
1.3 Functions of Financial Management/Manager
1.4 Financial Decision Making
1.5 Objectives/Goals of Financial Management
1.6 Factors Influencing Financial Decisions
1.6 Financial Management and Other areas of Study
1.7 Financial Environment
CHAPTER -II FINANCIAL STATEMENTS ANALYSIS (RATIO ANALYSIS)
Objective
After studying this chapter, you should be able to learn about introduction of
ratio analysis, advantages, Significance of Ratio Analysis to Users of
Financial data and different types ratios.
2.1 Introduction 6 Hrs.
2.2 Advantages of Ratio Analysis
2.3 Significance of Ratio Analysis to Users of Financial data
2.4 Types of Ratios
 Liquidity Ratios
 Leverage Ratios
 Coverage Ratios
 Activity Ratios
 Profitability Ratios
CHAPTER -III FINANCIAL DECISION
Objective
After studying this chapter, student is in a position to understand the concept
of leverage, operating and financial leverages, EBIT and EPS analysis,
concept of capital structure and its approaches. 6 Hrs.
3.1 Leverages
 Concept of leverage
 Operating and Financial leverage
 EBIT and EPS Analysis
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3. 3.2 Form of Capital structure
 Concept of Capital Structure
 Capital Structure Determinants
 Net Income Approach
 Net Operating Income Approach
 Modigliani and Miller Approach
CHAPTER -IV INVESTMENT DECISION
Objective
After studying this chapter, you should be able to understand the
introduction of capital budgeting, capital budgeting process, kinds of capital
budgeting decisions and different methods of capital budgeting. 6 Hrs.
4.1 Introduction to Capital Budgeting
4.2 Capital Budgeting Process
4.3 Kinds of Capital Budgeting Decisions
4.4 Methods of Capital budgeting
4.4.1 Traditional Methods
 Pay-back Period Method (PB)
 Average Rate of Return (ARR)
4.4.2 Time Adjusted or Discounted Cash Flow
 Net Present Value Method (NPV)
 Internal Rate of Return Method (IRR)
 Profitability Index Method (PI)
CHAPTER -V WORKING CAPITAL DECISION
Objective
After studying this chapter, you should be able to learn the concepts of
working capital, types and components working capital, factors determining 4 Hrs.
the working capital requirements and forecasting the working capital
requirements.
5.1 Concepts of Working capital
5.2 Types of Working Capital
5.3 Components of Working Capital
5.4 Factors Determining the Working Capital Requirements
5.5 Forecasting Working Capital Requirements
CHAPTER -VI DIVIDEND DECISION
Objective
After studying this chapter, you should be able to know dividend and
valuation of the firm, relevance and irrelevance dividend policies.
6.1 Introduction
6.2 Dividend and Valuation of the Firm 6 Hrs.
6.3 Relevance of Dividend Policy
 Walter’s Model
 Gordon’s Model
6.4 Irrelevance of Dividend Policy
 Residual Theory
 Modigliani- Miller Approach
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4. ASSESSMENT
Group/Individual Assignment ……………………………… 10%
Group/Individual Presentations …………………………….. 10%
Quizzes ……………………………….…………………….. 30%
Final Examination ………………………………………….. 50%
Total ………………………………………… 100%
SCALE
A [85–100] C [50 – 60]
B+ [75 – 84] D+ [40 – 49]
B [65 – 74] D [30 – 39]
C+ [61 – 64] F [0 – 30]
COURSE POLICY
 According to the MU legislation, you must attend at least 80% of the 32 hours (i.e., at
least 26 hours) and score at least 50% result from the continuous assessment; otherwise
you can’t sit for the final examination.
 You must submit group assignments at least within a given dead line.
 You must attend group assignments and group presentations regularly.
SUGGESTED READINGS:
 Brigham, E.F., and Ehrhardt, M.C., 2003, “Financial Management: Theory and Practice”,
South Western Publishing, USA, 12th Ed.
 I.M. Pandy, 2005, “Financial Management”, Vikas Publishing House Pvt. Ltd., New
Delhi, 9th Ed.
 Myers, S.C., and Brealey, R.A., 2003, “Principles of Corporate Finance”, McGraw-
Hill/Irwin, USA, 7th Ed.
 M Y Khan and P K Jain, 2004, “Financial Management Text, Problems and Cases”, Tata
McGraw Hill.
 Prasanna Chandra, 2001, “Financial Management – Theory and Practice”, Tata McGraw
Hill, 2nd ed.
 Preethi Singh, 2009, “Fundamentals of Financial Management”, Ane Books Pvt. Ltd.,
New Delhi, 2nd Ed.
 Any Book, journal, or article on Financial Management or Corporate Finance.
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