SCHOOL OF BUSINESS STUDIES

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SCHOOL OF BUSINESS STUDIES CENTRAL UNIVERSITY OF KASHMIR MBA-C105 FINANCIAL MANAGEMENT

CURRICLUM TRANSACTION STRATEGY

By: Mr Rahul Rangotra, Assistant Professor (Management Studies, Central University of Kashmir).

Course Code Title of the Course Type of

course

Credits Max.

Marks CIA

Max. Marks External

MBA-C-105 Financial Management C 4 40 60

Unit-I Topic Methodology No of Classes

needed

Financial Management

Nature and scope of finance, nature of financial decisions; financial goal- profit vs.

wealth maximization;

Lecture/PPT 4

Finance functions- investment, financing and dividend decisions;

Lecture/PPT 3

Time value of money, Discounting and Compounding techniques.

Lecture/PPT 3

Learning outcome

After studying this unit the student should have the knowledge of finance functions, basic concepts and practically implement the concept of time value of money.

Reference Material

Ø Pandey, I.M., Financial Management, Vikas Publishing House, New Delhi Ø Khan M Y, Jain P.K., Financial Management, Tata McGraw Hill, New Delhi.

Unit-II Topic Methodology No of Classes

needed

Capital Budgeting:

Nature of investment decisions;

investment criteria: net present value,

Lecture/PPT 4

internal rate of return, profitability index, payback period, accounting rate of return;

Lecture/PPT 3

NPV and IRR comparison; capital rationing Lecture/PPT/ Case studies 3 Learning

outcome

The student should be able to understand the concept of investment decisions and they should be able to evaluate the investment projects using the various investment criteria particularly the net present value criteria.

Unit-III Topic Methodology No of Classes

needed

Cost of capital and Leverage

Cost of capital: Nature and significance of cost of capital; calculation of cost of debt, preference capital,

Lecture/PPT 4

Cost of equity capital and retained earnings; weighted coat of capital

Lecture/PPT 3

Operating and financial Leverage:

Measurement of leverages; effect of operating and financial leverage on profit;

combined financial leverage and operating leverage.

Lecture/PPT/ Group Discussions 4

The students should be able to calculate the cost of various sources of finance and the weighted average cost of capital. They should also be able to calculate the financial and operating leverage and understand the concept of financial and operating risk.

Reference Ø Pandey, I.M., Financial Management, Vikas Publishing House, New Delhi

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Material Ø Khan M Y, Jain P.K., Financial Management, Tata McGraw Hill, New Delhi. Prashant Chowdhary, Retail Marketing in Modern Age, Sage India.

Unit-IV Topic Methodology No of Classes

needed

Capital structure and Dividend Policy

Capital structure: Concept and approaches of capital structure decisions; NI, NOI,

Lecture/PPT 3

Traditional and M.M. Hypothesis;

determinants of capital structure

Lecture/PPT/ Case Studies 3 Dividend decisions: Issues in dividend

decisions, theories of dividend; Walter model; Gordon’s model, M-M hypothesis, forms of dividend, factors affecting dividend decision

Lecture/PPT 3

The student should be able to understand the theories of capital structure and evaluate the impact of leverage on the capital structure. They should be able to implement the dividend decisions in the firm.

Unit-V Topic Methodology No of Classes

needed

Working Capital

Concept of gross and net working capital, types of working capital; various approaches to working capital management,

Lecture/PPT 3

factors affecting working capital requirement Working Capital Financing:

Sources of short term financing,

Lecture/PPT/ Case Studies 3

Role of commercial banks in providing working capital; commercial papers;

factoring.

Lecture/PPT 3

The student should be able to understand the concept of working capital and able to calculate the working capital requirements of the firm. They should also be able to evaluate the various sources of financing working capital needs of the firm.

Major Learning Outcomes:

The Major Objective of the Course: To acquaint students about the fundamental concepts and policy of managerial finance to enable them to apply rich body of financial theory in corporate decision making and in creating value for shareholders.

At the end of the semester the student will be able to:

Ø Implement the concept of the Time Value of Money i.e. various compounding and discounting techniques.

Ø Evaluate the various investment decisions using various techniques particularly the IRR and NPV.

Ø Calculate the cost of capital of the firm.

Ø Implement the Capital Structure decisions in the firm.

Ø Evaluate the dividend policy of the firm and take dividend decisions in the firm.

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Ø Calculate the working capital requirements of the firm and evaluate the various sources of working capital finance.

Ø Understand the concept of financial and operating leverage and evaluate the operating and financial and operating risk in the firm.

ACIVITIES:

Ø Case studies Ø Assignments Ø Worksheets Ø Presentations Ø Group discussions

Points for discussion:

Ø Finance Functions Ø Time value of money Ø Investment Decisions Ø Cost of Capital Ø Capital structure Ø Leverage

Ø Dividend Decisions Ø Working capital decisions Suggested Readings:

Ø

Chandra, Prasanna, Financial Management, Tata Mc Graw Hill, New Delhi.

Ø

Pandey, I.M., Financial Management, Vikas Publishing House, New Delhi

Ø

Khan M Y, Jain P.K., Financial Management, Tata McGraw Hill, New Delhi

Ø

Bhattarcharya, Hrisikhas, Working Capital management strategies and Techniques, Prentice Hall, New Delhi.

Ø Kuchhal, S.C., Financial management, Chaitnya Publishing House, Allahabad Czinkota, Michael R. and Kotabe, Masaaki, Marketing Management, Thomson Asia Pte Ltd.,

Singapore.

Ø N. Ramaswamy & K Ramaswamy-Principles of marketing management-Global outlook Indian

Reference Books:

Ø

Hampton, John, Financial Decision Making, Prentice hall, New Delhi

Ø

Van Horne, J.C. and J.M. Wachowicz Jr. Fundamentals of Financial Management, Prentice Hall, New Delhi.

Ø

Block, Stanley B, Geoffery A Hilt, Foundations of Financial Management, Richard D., Irwin, Homewood

Journals:

Ø Finance India

Ø Indian Journal of Finance & Research