As per the Syllabus of Uttarakhand Technical University and COER University, Roorkee

1. Introduction of Financial Management
by Amit Kumar

2. Syllabus
 Unit-1
Financial Management-Nature Objectives and Scope, Modern Concept of Finance, Financial
Decision- Types of Financial Decisions, Role of Finance Manager, Risk Return Framework for
Financial Decision Making, Time Value of Money.
 Unit 2
(a) Cost of capital: Concept of Value, Present Value, Basic Valuation Models.
(b) Capital Structure: Concept, Financial Leverage and its Impact on the Valuation of Firm,
Theories of Capital Structure- Net Income Approach, Operating Income Approach, Miller –
Modigliani Approach, Determinants of Capital Structure.
 Unit -3
Investment Decisions Nature and kinds of Capital Budgeting, Techniques of Evaluating Capital
Budgeting Decisions, Capital Budgeting under Risk and Uncertainty, Analysis of Real Life
Capital Budgeting Decisions - Some Case Studies.

3. Syllabus
 Unit -4
(a) Dividend Decisions: Dividend and its Form, Theories of Dividend Policy and their Impact
on the Value of a Firm, Determinants of Dividend Policy.
(b) Working Capital Management: Meaning and Concepts of Working Capital. Estimating
Working Capital Requirements. Management of Cash Receivables and Inventory.
 Unit-5
Corporate Restructuring- Merger and Acquisitions -Types, Sources of Takeover Gains,
Valuation and Financing of Acquisitions, Analysis of some Case Studies. The Empirical
Evidences on Theories and the Case Studies relevant for above Topics are required be
Discussed.

4. Unit -1 Financial Management
• Nature, Objectives &Scope,
• Modern Concept of Finance
• Financial Decision- Types of Financial Decisions,
• Role of Finance Manager.
• Risk Return Framework for Financial Decision
Making
• Time Value of Money.

5. Concept of Financial Management
Financial Management is a managerial
activity which is associated with
planning and controlling of companies’
financial resources because financial
resources are scare and limited which
needs proper planning and control in
order to achieve the best result out of
the complex situation of risk and
uncertainty prevailing in the business
world

6. Definition of Financial Management
According to Joseph & Massie-
“ Financial Management is the operational activity of a business that is responsible for obtaining
& effectively utilizing the fund necessary for efficient operations.”
According to Weston & Brigham
“Financial Management is an area of financial decision making , harmonizing individual
motives and enterprise goals”
In simple words-
“Financial Management is the planning , organizing, directing & controlling of the procurement
& utilization of funds and safe disposal of profits to the end that individual , organisational
and social objectives are accomplished”

7. Objectives of Financial Management
The objective provide a framework for
optimum financial decision making. They are
concerned with designing a method of operating the
internal investment and financing of a firm. There are
two widely discussed approaches under this, These
are:
1. Profit Maximization
2. Wealth Maximization

8. Financial Decision
Therefore financial management basically provides a conceptual and analytical framework for financial
decision making.
Financial Decision refers to decisions concerning financial matters of a business concern. Decisions
regarding magnitude of funds to be invested to enable a firm to accomplish its ultimate goal. Kind of
assets to be acquired etc.
Financial Decisions is a comprehensive financial planning and wealth management of firm that helps
high net worth individuals and businesses achieve their financial objectives.

9. Types of Financial Decisions
Every company is required to take three main financial decisions, they are:
Investment Decision
Financing Decision
Dividend Decision

10. Factor Affecting Investment Decision
 Cash Flows of the project
 Rate of Return
 Risk Involved
 Investment Criteria

11. Factor Affecting Financing Decision
 Cost
 Risk
 Floatation Cost
 Cash Flow position of the business
 State of Capital Market

12. Factor Affecting Dividend Decision
• Earning
• Stability of dividends
• Growth prospects
• Cash flow positions
• Taxation Policy

13. Role of Financial Manger in Morden Age
Estimating Financial
Requirement
Deciding Capital
Structure
Selecting Source of
Finance
Selecting pattern of
investment
Proper Cash
Management
Proper Uses of
Surpluses

14. Types of Risk
Risk
Systematic
Risk
Market
Risk
Interest
Rate Risk
Purchasing
Power Risk
Unsystematic
Risk
Business
Risk
Internal
Business
Risk
External
Business
Risk
Financial
Risk

15. Risk Framework for Financial
Decision Making
Various financial decision areas of risk
return framework are as follows-
1. Financial Analysis
2. Budgeting & Profit Planning
3. Capital Budgeting
4. Financial Planning
5. Working Capital Management
6. Cost of Capital

16. Time Value of Money (TVM)
i. An important principle in finance is that the value of money is
time dependent.
ii. The value of a unit of money is different in different time
periods.
iii.The value of a sum of money received today is more than its
value received after some time.
iv. Conversely, a sum of money received in future is less valuable
than it is today.
v. The time value of money is also referred as time preference for
money.

17. Reasons for Time Value of Money
i. Investment Opportunities: Money has the potential to grow over a period
of time because it can be invested somewhere. For example, if Rs. 1000
can be invested in a fixed deposit for one year at 7% p.a., the money will
grow to Rs, Rs. 1070 at the end of one year. Therefore, given the choice of
Rs. 1000 now or the same amount in one year’s time, it is always
preferable to take Rs. 1000 now.
ii. Inflation: Inflation is the fall in the purchasing power of money. It makes
money cheaper and the goods and services costlier. Suppose you can buy 1
kg of rice with Rs. 50 today. If the inflation rate is 10%, You need Rs. 55 to
buy 1 kg of rice a year from now.

18. iii. Risk: Money received now is certain, whereas money tomorrow is less
certain. This ’bird in the hand’ principle is extremely important in
investment appraisals.
iv. Personal consumption preference: Many people have a strong
preference for immediate rather than delayed consumption. For a
hungry man, promise of a meals next month means nothing.

19. Components of TVM
Present Value (PV):
PV is the current value of a future sum of money, discounted at a specific
interest rate.
Formula: �
Future Value (FV):
FV is the value of a sum of money at a specific time in the future, considering
compound interest.
Formula: �
Interest Rate (r):
The rate of return used to discount or compound future cash flows.

20. THANK YOU!