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Financial Management II
Class of

: 2013

Academic Year

: First

Course Code

: SL FI 502

Semester

: II

Credit

: 3

Sessions

: 30

Aim:
Develop a framework to evaluate key decision in respect of capital structure, dividend policy, working capital
management and decision involving alternate choices.
REFERENCE BOOKS

AUTHOR / PUBLICATION

Financial Management

Financial Management – IM Pandey- TMH

Financial Management: Theory & Practice
th

Chandra, Prasanna. Tata McGraw-Hill - 2007

Financial Management and Policy, 12 e

James C Van Horne. Prentice-Hall, India

Financial Management : Text & Problems

Khan M.Y / Jain, P.K. Tata McGraw-Hill - 2004

th

Financial Management , 7 e

Ravi M. Kishore. Taxmann's - 2009

Cost Accounting 2ed (Paperback)

Jawahar Lal- Tata McGraw-Hill

Detailed Syllabus
Financial Forecasting: Sales Forecast -Preparation
of Pro-Forma Income Statement and Balance Sheet Growth and External Funds Requirement - EFR
Leverage: Measuring and analyzing the
implications of Leverage - Operating Leverage,
Financial Leverage and Total Leverage.
Capital Structure Theories: Net Income Approach Net Operating Income Approach -Traditional
Approach - Modigliani-Miller Model (MM), Miller
Model - Criticisms of MM and Miller Models Financial Distress & Agency Cost - Asymmetric
Information Theory.
Capital Structure Policy: Business & Financial Risk - A
Total Risk Perspective - Business & Financial Risk - A
Market Risk Perspective -Determinants of Capital
Structure Decision -Approach to Estimating the
Target Capital Structure - Variations in Capital
Structures, EBIT / EPS Analysis and ROI / ROE
Analysis

Dividend Policy: Traditional Position - Walter Model
- Gordon Model - Miller-Modigliani Position - and
Rational Expectations Model.
Estimation of Working Capital Needs: Objectives of
Working Capital (Conservative vs Aggressive
Policies), Static vs Dynamic View of Working Capital
- Factors Affecting the Composition of Working
Capital Independence among Components of
Working Capital - Operating Cycle Approach to
Working Capital.
Inventory Management: Nature of Inventory and its
Role in Working Capital - Purpose of Inventories Types and Costs of Inventory -Inventory
Management Techniques - Pricing of Investments Inventory Planning and Control.
Receivables
Management:
Purpose
of
Receivables - Cost of Maintaining Receivables Credit Policy Variables (Credit Standard, Credit
Period, Cash Discount, Collection Program), Credit
Evaluation - and Monitoring Receivables.
Financing Current Assets: Behaviours of
Current Assets and Pattern of Financing -Accruals
- Trade Credit - Provisions - Short-Term Bank
Finance - Factoring
Treasury Management and Control: Cash
Management - Meaning of Cash - Need for and
Objectives of Cash Management - Cash
Forecasting and Budgets - Cash Reports - and
Efficient Cash Management.
Cost- Volume- Profit Analysis: The Relationship of
Costs and Profits with Volumes- Use of CVP AnalysisMarginal Costing- Marginal Costing and Absorption
Costing
DistinguishedBreak-even
Point
Contribution Margin Approach.
Decisions involving Alternate choices: Nature of
managerial decision making- characteristics of cost
for decision making- concept of different costsdecision to make or buy- decision to line
replacement- decision regarding selling or further
processing.
Cases and Exercises
Hero Honda’s Dividend Policy
Intel: Managing Working Capital
Dressen (Abridged) (A)
The Fall of United Western Bank
DLF Ltd: Working Capital Analysis
Women led family owned business: Capital
Structure of Balajitelefilms limited.
Dr. Reddy’s Laboratories: Financial Forecosting
Source : CDC

Suggested Schedule of Sessions
Topic

No. of
Sessions

Financial Forecasting ( include case
discussion

2

Leverage

2

Capital Structure- Theories and policy

2

Cases on Capital Structure Theories and
Capital Structure Policy
Dividend Policy
Cases on Dividend Policy
Estimation of Working Capital Needs
(including case discussion)
Inventory Management
Receivables Management
Cases on Working Capital Management,
Inventory Management and Receivables
Management
Financing Current Assets (including case
discussion)
Treasury Management And Control
(including case discussion)
Cost -Volume -Profit Analysis
Decisions involving Alternate choices
Current
Total

1
2
1
2
3
2
2

2
1
3
4
30
Slfi502 fm ii

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Slfi502 fm ii

  • 1. Financial Management II Class of : 2013 Academic Year : First Course Code : SL FI 502 Semester : II Credit : 3 Sessions : 30 Aim: Develop a framework to evaluate key decision in respect of capital structure, dividend policy, working capital management and decision involving alternate choices. REFERENCE BOOKS AUTHOR / PUBLICATION Financial Management Financial Management – IM Pandey- TMH Financial Management: Theory & Practice th Chandra, Prasanna. Tata McGraw-Hill - 2007 Financial Management and Policy, 12 e James C Van Horne. Prentice-Hall, India Financial Management : Text & Problems Khan M.Y / Jain, P.K. Tata McGraw-Hill - 2004 th Financial Management , 7 e Ravi M. Kishore. Taxmann's - 2009 Cost Accounting 2ed (Paperback) Jawahar Lal- Tata McGraw-Hill Detailed Syllabus Financial Forecasting: Sales Forecast -Preparation of Pro-Forma Income Statement and Balance Sheet Growth and External Funds Requirement - EFR Leverage: Measuring and analyzing the implications of Leverage - Operating Leverage, Financial Leverage and Total Leverage. Capital Structure Theories: Net Income Approach Net Operating Income Approach -Traditional Approach - Modigliani-Miller Model (MM), Miller Model - Criticisms of MM and Miller Models Financial Distress & Agency Cost - Asymmetric Information Theory. Capital Structure Policy: Business & Financial Risk - A Total Risk Perspective - Business & Financial Risk - A Market Risk Perspective -Determinants of Capital Structure Decision -Approach to Estimating the Target Capital Structure - Variations in Capital Structures, EBIT / EPS Analysis and ROI / ROE Analysis Dividend Policy: Traditional Position - Walter Model - Gordon Model - Miller-Modigliani Position - and Rational Expectations Model. Estimation of Working Capital Needs: Objectives of Working Capital (Conservative vs Aggressive Policies), Static vs Dynamic View of Working Capital - Factors Affecting the Composition of Working Capital Independence among Components of Working Capital - Operating Cycle Approach to Working Capital. Inventory Management: Nature of Inventory and its Role in Working Capital - Purpose of Inventories Types and Costs of Inventory -Inventory Management Techniques - Pricing of Investments Inventory Planning and Control. Receivables Management: Purpose of Receivables - Cost of Maintaining Receivables Credit Policy Variables (Credit Standard, Credit Period, Cash Discount, Collection Program), Credit Evaluation - and Monitoring Receivables.
  • 2. Financing Current Assets: Behaviours of Current Assets and Pattern of Financing -Accruals - Trade Credit - Provisions - Short-Term Bank Finance - Factoring Treasury Management and Control: Cash Management - Meaning of Cash - Need for and Objectives of Cash Management - Cash Forecasting and Budgets - Cash Reports - and Efficient Cash Management. Cost- Volume- Profit Analysis: The Relationship of Costs and Profits with Volumes- Use of CVP AnalysisMarginal Costing- Marginal Costing and Absorption Costing DistinguishedBreak-even Point Contribution Margin Approach. Decisions involving Alternate choices: Nature of managerial decision making- characteristics of cost for decision making- concept of different costsdecision to make or buy- decision to line replacement- decision regarding selling or further processing. Cases and Exercises Hero Honda’s Dividend Policy Intel: Managing Working Capital Dressen (Abridged) (A) The Fall of United Western Bank DLF Ltd: Working Capital Analysis Women led family owned business: Capital Structure of Balajitelefilms limited. Dr. Reddy’s Laboratories: Financial Forecosting Source : CDC Suggested Schedule of Sessions Topic No. of Sessions Financial Forecasting ( include case discussion 2 Leverage 2 Capital Structure- Theories and policy 2 Cases on Capital Structure Theories and Capital Structure Policy Dividend Policy Cases on Dividend Policy Estimation of Working Capital Needs (including case discussion) Inventory Management Receivables Management Cases on Working Capital Management, Inventory Management and Receivables Management Financing Current Assets (including case discussion) Treasury Management And Control (including case discussion) Cost -Volume -Profit Analysis Decisions involving Alternate choices Current Total 1 2 1 2 3 2 2 2 1 3 4 30