Unit –I
Introduction to Financial Management: Objectives - Functions and Scope - Evolution -
Interface of Financial Management with Other Functional Areas - Environment of Corporate
Finance. Sources of Long-Term Finance: Equity Capital and Preference Capital -
Debenture Capital - Term Loans and Deferred Credit, Leasing and Hire-Purchase - New
Instruments. Raising Long-term Finance: Venture Capital, Initial Public Offering, Public
Issue by listed companies, Rights Issue, Preferential allotment, Private placement, Term
Loans Valuation of Securities: Concept Of Valuation - Bond Valuation - Equity Valuation:
Dividend Capitalization Approach and Ratio Approach -Valuation of Warrants and
Convertibles.
Unit –II
Introduction to Risk and Return: Risk and Return Concepts - Risk in a Portfolio Context -
Relationship Between Risk and Return -CAPM and Dividend Capitalization Model. Time
Value of Money: Introduction - Types of Cash flows - Future Value of a Single Cash Flow,
Multiple Flows and Annuity - Present Value of A Single Cash Flow, Multiple Flows and
Annuity, Growing Annuity, Perpetuity and Growing Perpetuity. Basics of Capital
Expenditure Decisions: The Process of Capital Budgeting - Basic Principles in Estimating
Cost and Benefits of Investments -Appraisal Criteria: Discounted and Non-Discounted
Methods (Pay-Back Period -Average rate of return - Net Present Value -Benefit Cost Ratio -
Internal Rate of Return) Analysis of Project Cash Flows: Cash Flow Estimation -
Identifying the Relevant Cash Flows - Cash Flow Analysis - Replacement, Cash Flow
Estimation Bias - Evaluating Projects with Unequal Life - Adjusting Cash Flow for
Inflation.,Capital Rationing.
Unit –III
Leverage: Measuring and analyzing the implications of Leverage - Operating Leverage,
Financial Leverage and Total Leverage. 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.
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.
Dividend Policy: Traditional Position - Walter Model - Gordon Model - Miller-Modigliani
Position - and Rational Expectations Model
Unit –IV
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 and Cash Management. 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
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: Behavior of
Current Assets and Pattern of Financing -Accruals - Trade Credit - Provisions - Short-Term
Bank Finance - Public Deposits, Commercial Paper - Factoring