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Financial Management
Course Objective: The basic purpose of this course is to develop an insight in the field of financial management so as to equip the student with basic knowledge required for financial decision making. Course Outcomes(CO): Course Learning outcomes (at course level) Learning and teaching strategies Assessment Strategies Paper Code Paper Title MHR 225 Financial Management CO 77: Apply discounting and compounding techniques to solve practical financial problems. CO 78: Analyze risk and return associated with a security or portfolio CO 79: Examine Cash Management, Marketable Securities Management, Receivables Management and Inventory Management. CO 80: Calculate working capital requirements and Cost of Capital of a Company. CO 81: Evaluate a project proposal using Capital Budgeting techniques CO 82: Analyze Leverage; Capital Structure and Dividend policy of a company. Approach in teaching: Interactive Lectures, Group Discussion, Tutorials, Case Study Learning activities for the students: Self-learning assignments, presentations Class test, Semester end examinations, Quiz, Assignments, Presentation
Meaning, Nature, Scope, Importance and Objectives of Financial Management; Functions of a chief financial officer; Sources of finance- Long term and Short term; Indian financial system-structure and functions. Time value of money-Compounding and Discounting concept and its applications
Risk and Return – Risk of a single asset, portfolio theory and risk diversification, Systematic and unsystematic risk, Capital Asset pricing model (CAPM)- Assumptions, CAPM equation, Security Market line (SML)
Cash and Marketable securities management- Meaning and Principles of cash management;
Management of working capital- Meaning, Estimation of working capital requirements, Working capital financing by banks; Receivables management- Meaning and importance; Inventory management- Meaning, objectives and techniques-Economic order quantity, Re-order point, Fixing stock levels.
Cost of Capital- Meaning, Cost of Debt, Preference and Equity Capital, Weighted average cost of capital; Capital Budgeting: Concept, need and objectives; Methods of Capital budgeting –Average Rate of Return, Payback period, Net present value, Internal Rate of Return, Profitability Index.
Leverage: Meaning, types of leverages and their significance; Capital Structure-Meaning, considerations in capital structure planning, value of firm and capital structure; Dividend Policy- Meaning, Factors affecting dividend decisions, Alternative forms of dividends, Types of dividend policies, Dividend policy models-Assumptions and criticism
