Financial Management Syllabus - BHM (TU)

Course Objective

This course aims to provide students basic understandings of fundamental concepts and principles of financial management. It deals with how effectively financial resources are raised and used in business .This course also equips the students with fundamental tools and techniques of financial management that are useful to undertake financial decisions.

Course Description

This course contains introduction to financial management, time value of money, cost of capital, inventory management, capital structure and leverage, short-term financing, basics of capital budgeting decisions.

Course Details

Unit 1: Introduction to financial management                                                                                                                            LH 3

Nature and functions of financial management, the goal of the financial management, the agency problem.

Unit 2: Time value of money                                                                                            LH 10

Concept and significance of time value of money, Cash flow timeline, Future value and compounding, present value and discounting, finding discount rate and number of periods, annuity, solving inters rate in annuities , present value of perpetuity, uneven cash flow streams, semi-annual and other compounding, amortized loans.

Unit 3: Cost of capital                                                                                                       LH 5

Concepts and uses of cost of capital, component cost of capital: Cost of debt, cost of preferred stock, cost of retained earnings, cost of common stocks, Weighted Average Cost of capital.

Unit 4: Inventory management                                                                                        LH 4

Purpose and significance of inventory management, Basic inventory costs, The economic order quantity model , re-ordering level, safety stock , minimum stock level, maximum stock level, ABC analysis system and perpetual inventory system.

Unit 5: Capital structure and leverage                                                                              LH 8

Capital structure and financial structure, Optimal capital structure and WACC, Business risk and financial risk, Degree of operating leverage, financial leverage and total leverage, factors affecting capital structure decisions.

Unit 6: Short -term financing                                                                                            LH 8

Need of short-term fund, sources of short- term financing, accruals and deferred income, trade credit, short-term bank loans, cost of bank loans, commercial paper, inventory financing , account receivable financing.

Unit 7: Basics of Capital Budgeting Decisions                                                                                                                             LH 10

Concepts and significance of capital budgeting, Process of capital budgeting decisions, Classification of capital projects, Capital Budgeting technique: payback period, discounted payback period, accounting rate of return, net present value, IRR, profitability index, Evaluating techniques.

References

Brigham, E. F.   & Houston, J. F. Fundamentals of Financial Management, New Delhi: Cengage Learning, Thomson South Western

Pandey, I. M. Financial Management, New Delhi: Vikash Publishing House

Gitman, L.J. Principles of financial management, New Delhi: Pearson Education, Prentice Hall

Van Horne, J.C. & Wachowicz, J. R. Fundamental of financial management, New Delhi: Pearson Education Prentice Hall