Fundamentals of Financial Management Syllabus - BCIS (PU)

Course Objectives

The aim of this course is to impart the fundamental knowledge of financial management to the students and enhance their analytical knowledge and skill in financial management of related industry through specific cases.

Course Description

This course is designed focusing the student who study only one semester course of financial management, and therefore it covers only the fundamentals aspects of financial Management. This course introduces financial concept and principles, and explains how they apply to specific operation in non-financial service sectors such as hospitals, hotel, IT and Travel businesses. This course introduction to financial management environment, financial statements and analysis of service industry, risk and returns, time value of money, raising capital, cost of capital, capital budgeting, capital structure and leverage, dividend policy and working capitals management.

Course Outcomes

By the end of this course, students should be able to:

• Understand the basics of financial management, form of organization of non-financial service industry and structure of financial marks and institution;
• Understand and analyze the financial statements of service industry using the key financial ratio;
• Rise fund form the financial markets;
• Apply the concept of time value of money to work out the value of different types of cash flows;
• Calculate the components and composite cost of capital;
• Apply the different techniques of capital budgeting to select the projects;
• Understand basic aspect of capital structure and leverage; and
• Explain dividend decision; and
• Discuss the concept and components working capitals, and calculates the working capital cash flow cycle.

Course Concept

Unit I: Financial Management and Its Environment                                                      6 hours

Nature of financial management; Finance functions; Role of the financial managers; financial goals; Form of organizations; and an overview of financial institution and markets.

Unit II: Financial statement and analysis                                                                       6 hours

Understanding financial statements: Income statement, Cash flow statement and balance sheet; Common size balance sheet; Ratio analysis: Short-term solvency measures, Long-term solvency measure, Asset management measure, Profitability measures, Market value measures, The DuPont identity; Use and Limitation of financial ratios.

Unit III: Time Value of Money                                                                                       6 hours

Concept of time value of money; Present values and discounting; Future values and compounding; Annuities and perpetuities; Effective interest rate and average percentage return; Application of time value of money in hospitality industry.

Unit IV: Raising Capital                                                                                                   7 hours

Short-term versus long-term loan; Bonds: meaning, types, Bond innovation; preferred stock; Common stock: equity account in balance sheet, Right and privileges of common stockholders; Cost and benefit of debt versus equity; Methods of selling securities; Initial public offerings; Concept and functions of investment bankers; Concept of venture capitals; and concept of lease financing.

Unit V: Cost of Capitals                                                                                                    4 hours

Concept of cost of capitals; Component cost of capital: Debt, Preferred stock. Common stock Retained earnings; Weighted average cost of capital, Application of cost of capitals in financial decision making in hospitality industry.

Unit VI: Capital Budgeting                                                                                              6 hours

Concept of capital budgeting; Types of projects; Capital budgeting techniques ^_ payback period, NPV, IRR, Comparison on NPV with IRR, and profitability index; and application of capital budgeting techniques.

Unit VII: Capital structure                                                                                               4 hours

Concept of capital structure and financial structure; Setting target capital structure; Factors affecting capital structure; Business risk and financial risk; Operating and financial leverage.

Unit VIII: Dividend Decision                                                                                             4 hour

Concept of dividend; Cash dividend versus stock dividend; Dividend payment process; Stock dividend and stock split.

Unit IX: Working Capital Management                                                                           5 hour

Concept and component of working capital; Importance of work capital management; Types of working; Factors affecting working capitals; and working capital flow cycle.

Basic Texts

1. Ross, S. A., Westerfield, R. W., & Jorda, B. D. Fundamentals of corporate financial. New Delhi: Tata McGraw-Hill.

Reference

1. Gapenski, L. Healthcare finance: an introduction to according and financial management. Chicago: Health Administration Press