Financial Management

Lectures: 71

I. Course Description
The aim of the course is to bring to your cognizance the theoretical and practical tools used in financial management and how issues relating to financial management are handled. The course content consists basically of issues relating to how finance is managed in various organizations.
II. Learning Outcomes:
Upon successful completion of the course, student should be able to:
1. Describe what the subject financial management is about.
2. Explain the five principles of finance that form the basis of financial management for both businesses and individuals.
3. Describe the structure and functions of financial markets.
4. Describe the content of the four basic financial statements and discuss the importance of financial statement analysis to the financial manager.
5. Understanding budgeting capital to apply the net present value criterion to complex capital budgeting problems.
6. Identify the key features of bonds and describe the difference between private and public debt markets.
7. Identify the basic characteristics and features of common stock and use the discounted cash flow model to value common shares.
8. Use the profitability index, internal rate of return, and payback criteria to evaluate investment opportunities.
9. Understand the concepts underlying the firm’s overall cost of capital and the purpose for its calculation.

 

Chapter 1: Overview of Financial Management

1
1.1 Meaning of Financial Management
2
1.2 Nature of Financial Management
3
1.3 Objectives of Financial Management
4
1.4 Scope of Financial Management
5
1.5 Functions of Financial Management
6
1.6 The Role of Financial Managers
7
1.7 Three Types of Business Organizations
8
1.8 The Five Basic Principles of Finance

Chapter 2: Financial Statement Analysis

1
2.1 Financial Statement Analysis
2
2.2 Trend Analysis
3
2.3 Common-size Analysis
4
2.4 Ratio Analysis
5
I. Liquidity ratios
6
II. Asset management ratios
7
III. Debt management ratios
8
IV. Profitability ratios
9
V. Market value ratios

Chapter 3: Time Value of Money

1
3.1 Future value of a lump-sum
2
3.2 Present value of a lump-sum
3
3.3 Annuities
4
I. Ordinary annuity
5
II. Annuity Due
6
3.4 Amortized Loans
7
3.5 Perpetuities
8
I. Level perpetuity
9
II. Growing perpetuity

Chapter 4: Risk Return and Valuation

1
4.1 Meaning of Return
2
4.2 Methods of Return Measurement
3
4.3 Methods of Risk Measurement
4
4.4 Measuring Risk
5
4.5 Portfolio Returns
6
4.6 Portfolio Risk
7
4.7 Capital Asset Pricing Model (CAPM)
8
4.8 Efficient Market Hypothesis

Chapter 5: Bond Valuation

1
5.1 Meaning of Interest rate
2
5.2 Fisher Effect
3
5.3 Concept of Bond & its valuation
4
5.4 Bond Yields
5
I. Current yield (CY)
6
II. Yield to maturity (YTM)
7
III. Yield to call (YTC)

Chapter 6: Stock Valuation

1
6.1 Meaning of Stocks
2
I. Preferred stock
3
II. Common stock
4
6.2 Stock Valuation Models
5
I. Zero Growth Model
6
II. Constant Growth Model
7
III. Variable-Growth Model

Chapter 7: Cost of Capital

1
7.1 Meaning of cost of capital
2
7.2 Cost of debt (capital)
3
7.3 Cost of Preferred Stock
4
7.4 Common Stock Financing
5
I. Dividend Growth Model
6
II. Capital Asset Pricing Model (CAPM)
7
7.4 Weighted Average Cost of Capital
8
7.5 Factors that affect the WACC

Chapter 8: Capital Budgeting

1
8.1 Meaning of Capital Budgeting
2
8.2 Capital Budgeting Process
3
8.3 Non-discounting Techniques
4
8.4 Discounting Techniques
5
8.5 Managerial (Real) Options
6
8.6 Capital Rationing

Chapter 9: Capital Structure

1
9.1 Meaning of Capital Structure
2
9.2 Factors Determining Capital Structure
3
9.3 Technique of Planning the Capital structure
4
I. EBIT–EPS Analysis
5
II. Point of Indifference
6
9.4 Capital Structure Theories
7
I. Net income (NI) Approach
8
II. Net operating income (NOI) Approach
9
III. Modigliani and Miller Approach

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