Course Title: Managerial Finance/Financial Management
Course Code:
Credit Hours: 3+0
Course Instructor:
PREREQUISITES
Financial Accounting, Financial Management
COURSE DESCRIPTION/OBJECTIVES:
Every decision that a business makes has financial implications, and any decision which affects
the finances of a business is a corporate finance decision. The objectives of the course is
 To provide the students basic concepts of corporate finance
 To provide students with an in-depth knowledge of business finance concepts, principles
and methods and
 To develop the ability and skills to develop finance concepts to be applied in different
organizations.
 to help the students to understand the financial problems faced by the business today, as
well as the best way to solve these problems
INTENDED COURSE LEARNING OUTCOMES:
After studying this course the students would be able to:
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

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Understand the importance of a firms cost of capital and be able to estimate it from given
capital structure.
Be able to use basic capital budgeting tools like Net present value, and internal rate of
return to determine the desirability of both long term and short term capital investment.
Understand and be able to analyze the difference between investment decisions and
financial decisions and apply them in their businesses.
Understand the impact of capital structure decisions and be able to perform break-even
analysis.
Analyze the financial position of the company through financial ratio analysis
RECOMMENDED TEXTBOOKS:
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
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Fundamentals of Financial Management by James C Van Horne (13th/ Latest Edition)
Fundamentals of Financial Management by Eugene F. Brigham (12th/ Latest Edition)
Fundamentals of Corporate Finance By Ross Wester field and Jordon (9th/Latest Edition)
REFERENCE BOOKS:

Theory and problems of Financial Management By M Y Khan & P K Jain (5th Edition)
ASSESSMENT INSTRUMENTS WITH WEIGHTS:
S.NO
1
2
3
Week #
Items
Mid Term Exam
End Term Exam
Internal Evaluation Breakdown
Quiz(s)
Assignements(s)
Class Participation
Case Study and Presentations.
Total
Grand Total
Lecture #
1.
1.
2.
2.
3.
4.
Marks
30
50
5
5
3.5
6.5
20
100
TOPICS TO BE COVERED
Objective, corporate finance & the finance manager, financial statements and
financial corporate decisions, goal of financial management, agency problem
and control of the corporation.
Forms of business organizations & their characteristics
 sole proprietorship
 partnership
 joint stock companies, limited liability concept, legal status and process
of their formation till IPO
 Difference between Pvt limited and Public Limited company
 Advantages and limitations of each business
 Hierarchy of a Company
Goal of the firm, difference between profit maximization and shareholders
wealth maximization, agency problems
Corporate social responsibility, Corporate governance & tax
Basic Classification of markets
 Primary Market (IPO & FPO)
 Secondary Markets
 OTC Markets
Classification of markets on the basis of money market and capital marketcharacteristics, advantages and Limitations
Types & characteristics of Financial assets/securities/instruments traded in
above markets
 Common Stock
 Preference stock and types
 Bonds/Debentures
 Money Market Instruments
The financial environment
 Financial Intermediation concept and Flow of funds in different types of
markets, direct flow of funds vs indirect flow of funds
5.
3.
6.
4.
7.
8.
9.
5.
10
11.
6.
7.
12
13.
14.
15.
8.
16.
17.
9.
18.
10.
11.
19.
20.
21.
22.
23.
12.
24.
13.
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14.
27.
28.
Time Value of Money (TVM)
TVM concept & importance
Determinants of TVM (Inflation & purchasing power, reinvestment, risk)
Interest Rate, Simple interest verses compound interest.
Practice Questions.
Annuities verses compounding and discounting.
Present value annuities, Ordinary annuity vs annuity due.
Future value of ordinary annuity and Future value of annuity due.
Calculations of number of payments (periods) (n) and discount rate (i)
Comparison between quoted interest and effective Interest
Loan types; Pure Discount Loans, Interest Only Loans, Amortized Loans with
Amortization Schedule
Practice Questions
Valuation of Long Term Securities
Market Value, Face Value, Book Value & Intrinsic Value Concept
Bond, Types of Bonds, Non-Zero and Zero Coupon Bonds
Valuation of Zero, Non-Zero Coupon Bonds, Perpetuity
Mid Term Exam
Mid Term Break
Result Display, Yield to Maturity & Interpolation Technique
Concepts of Yield to Call, Current Yield and Capital Gains and Loss Yield.
Valuation of Common Stock.
Dividend discount models (Special Cases): Zero-growth model, Constant
Growth Model: Practice Questions.
Stock Valuation: Supernormal Growth Model and 2-Stage Growth Model;
Practice Questions
Components of the Required Rate of Return of the Stock, Practice Questions
Capital Budgeting Techniques: Application of Techniques: Payback &
Discounted Payback Period, Net Present Value
IRR (Interpolation Method), Profitability Index, Practice Questions
Mutually Exclusive Projects; Difference of Scale, Difference of Pattern
(Contd.) Difference of Life, Capital rationing, Practice Questions
Cost of Capital, Role of Corporate Taxes, Cost of Preferred Stock and Common
Stock
Weighted Average Cost of Capital (WACC), Role of Floatation Cost and Cost
of External Equity
Financial Ratio Analysis and Financial Planning: Importance and Need for
Analysis and Planning
Benefits and Limitations of Ratio Analysis, Liquidity Ratios
(Contd.) Leverage/Debt Ratios, Activity/Efficiency Ratios
(Contd.) Profitability Ratios, Du-Pont Identity, Market Ratios
END TERM