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CENTRAL UNIVERSITY OF HIMACHAL PRADESH

[Established under the Central Universities Act 2009]

PO Box: 21, Dharamshala, District Kangra - 176215 (HP) www.cuhimachal.ac.in Course Code: AFA 403 Course Name: Financial Management Credits Equivalent: 2 Credits (One credit is equivalent to 10 hours of lectures / organised classroom activity / contact hours; 5 hours of laboratory work / practical / field work / Tutorial / teacher-led activity and 15 hours of other workload such as independent individual/ group work; obligatory/ optional work placement; literature survey/ library work; data collection/ field work; writing of papers/ projects/dissertation/thesis; seminars, etc.) Course Objectives: The course is designed to Help students in understanding Basic concepts of financial management and also to know about the various sources of finance. Understand the various uses for finance. It is also aimed at helping student equip themselves with the various techniques used in financial management Attendance Requirements: Students are expected to attend all lectures in order to be able to fully benefit from the course. A minimum of 75% attendance is a must failing which a student may not be permitted to appear in examination. Evaluation Criteria: 1. Mid Term Examination: 25% 2. End Term Examination: 50% 3. Continuous Internal Assessment: 25% Library Work Assignment: 5% Subjective Assignment: 5% Quizzes/Games/Puzzles: 5% Personality Assessment: 5% Live Projects: 5% Course Contents: UNIT - I: An overview of Financial Management (3 Hours) Introduction to Financial Management ,Meaning of Financial Management, Evolution of Financial Management, Scope of Financial Management Objectives of Financial Management, Financial Goal: Profit Versus Wealth, Finance Functions, Financial Decisions, Investment Decisions , Dividend Decisions Functional Areas of Financial Management, Functions of a Finance Manager, Role of Finance Manager in the Changing Scenario, RiskReturn Tradeoff

UNIT - II: Hours)

Time Value of Money

(5

Concept of Time Value of Money, Technique of Time Value of Money, Compounding Technique Doubling Period, Effective Rate of Interest, Future Value of Series of Payments Future Value of an Annuity, Compound Value of an Annuity Due Discounting or Present Value Technique, Present Value of a Series of Payments, Present Value of an Annuity Practical Applications of Time Value Techniques, Valuation of Bonds and Stocks UNIT - III: Cost of Capital and Form of Capital: Capital Structure (5 hours) Sources of Finance, Classification of Sources of Finance, Meaning Concept and Definition of Cost of Capital, Significance of Cost of Capital Classification of Cost, Computation of Cost of Capital, Weighted Average Cost of Capital, Marginal Cost of Capital Introduction to Capital Structure, Capitalization, Capital Structure and Financial Structure, Forms of Capital Structure, Importance of Capital Structure, Optimal Capital Structure Theories of Capital Structure, Net Income Approach, Net Operating Income Approach, The Traditional Approach Modigliani-Miller Approach, Working Capital Management: Cash, Receivables and Inventory UNIT - IV: Dividend Policy and Firm Valuation (3 Hours) Meaning of Management of Earning, Dividend Policy, Types of Dividend Policy, Factors Influencing Dividend Policy, Bonus Shares SEBI Guidelines for Issue of Bonus Share, Dividend Policy and Firm Value Dividend Theories: Walters Model, Gordons Model, Modigliani-Miller Model UNIT V: Leverages and Techniques of Capital Budgeting (4 Hours) Leverages, Types of Leverages, Financial Leverage or Trading on Equity, Operating Leverage, Composite Leverage Nature of Fixed Assets, Meaning of Capital Budgeting, Importance of Capital Budgeting, Difficulties in Capital Budgeting, Investment Evaluation Criteria Traditional Techniques: Pay Back Period, ARR

Modern Techniques: NPV, IRR and PI, Compare and Contrast NPV with IRR Prescribed Text Books: 1. Prasanna Chandra (2011) Financial Management, Eighth Edition, Tata McGraw Hill, New Delhi. 2. Parrino & Kidwell (2011) Fundamentals of corporate finance, First Edition, Wiley India Pvt. Ltd., New Delhi. 3. Khan and Jain (2011) Financial Management (Text Problems and Cases), Fifth Edition, Tata McGraw Hill, New Delhi. Suggested Extra Readings: 1. Shah (2011) Financial Management, First Edition, Wiley India Pvt. Ltd., New Delhi. 2. Kapil (2011) Financial Management, First Edition, Pearson, New Delhi. 3. Rustagi (2011) Financial Management, Fifth Edition, Taxmanns, New Delhi. 4. Maheshwari S.N. (2010), Financial Management (Principles and Practice), Latest Edition, Sultan Chand & Sons, New Delhi. 5. Kulkarni & Satyaprasad (2009) Financial Management, Sixteenth Edition, Himalaya Publishing House, Mumbai. 6. Banerjee (2010) Fundamentals of Financial Management, Second Edition, PHI Learning, New Delhi. 7. Periasamy (2010) Financial Management, Second Edition, Tata McGraw Hill, New Delhi. 8. Pandey I M (2011) Financial Management, Tenth Edition, Vikas Publising House, New Delhi.

LECTURE PLAN
Lectures Prescrib ed Text Book Introduction to Financial Management ,Meaning of Financial Management, Book -1 Evolution of Financial Management, Scope of Financial Management Objectives of Financial Management, Financial Goal: Profit Book-2 Versus Wealth, Finance Functions, Financial Decisions, Investment Decisions , Dividend Decisions Functional Areas of Financial Management, Functions of a Book-3 Finance Manager, Role of Finance Manager in the Changing Scenario, Risk-Return Tradeoff Concept of Time Value of Money, Technique of Time Value of Book-3 Money, Compounding Technique Doubling Period, Effective Rate of Interest, Future Value of Book-3 Series of Payments Future Value of an Annuity, Compound Value of an Annuity Due Book-3 Discounting or Present Value Technique, Present Value of a Series of Payments, Present Value of an Annuity Practical Applications of Time Value Techniques, Valuation of Bonds and Stocks Sources of Finance, Classification of Sources of Finance, Meaning Concept and Definition of Cost of Capital, Significance of Cost of Capital Classification of Cost, Computation of Cost of Capital, Weighted Average Cost of Capital, Marginal Cost of Capital Introduction to Capital Structure, Capitalization, Capital Structure and Financial Structure, Forms of Capital Structure, Importance of Capital Structure, Optimal Capital Structure Theories of Capital Structure, Net Income Approach, Net Operating Income Approach, The Traditional Approach Book-3 Book-3 Book-2 Topics Chapte r No. Chapter1 Chapter2,6 Chapter2 Chapter5 Chapter5 Chapter5 Chapter5 Chapter5,7 Chapter5,6 Chapter6 Chapter11 Chapter11

Lecture-1 Lecture-2

Lecture-3

Lecture-4 Lecture-5 Lecture-6 Lecture-7 Lecture-8 Lecture-9

Lecture-10 Lecture-11

Book-2 Book-3

Lecture-12

Book-3

Lecture-13 Lecture-14

Modigliani-Miller Approach, Working Capital Management: Cash, Receivables and Inventory Meaning of Management of Earning, Dividend Policy, Types of Dividend Policy, Factors Influencing Dividend Policy, Bonus Shares SEBI Guidelines for Issue of Bonus Share, Dividend Policy and Firm Value Dividend Theories: Walters Model, Gordons Model, ModiglianiMiller Model Leverages, Types of Leverages, Financial Leverage or Trading on Equity, Operating Leverage, Composite Leverage Nature of Fixed Assets, Meaning of Capital Budgeting, Importance of Capital Budgeting, Difficulties in Capital Budgeting, Investment Evaluation Criteria Traditional Techniques: Pay Back Period, ARR Modern Techniques: NPV, IRR and PI, Compare and Contrast NPV with IRR

Book-3 Book-2

Chapter11,18,19, 20,

Chapter9 Chapter9 Chapter9 Chapter11 Chapter9 Chapter9 Chapter9

Lecture-15 Lecture-16 Lecture-17 Lecture-18

Book-2 Book-2 Book-2 Book-3

Lecture-19 Lecture-20

Book-3 Book-3

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