FINANCIAL MANAGEMENT

Module 1 Introduction to Finance Introduction to Financial management: Business Finance-

Concept, types and scope. Financial management: objectives, functions and scope - Interface of
financial management with other functional areas. Role of finance manager- Financial
forecasting - Financial planning. Risk and Return concept: Relationship between risk and
return Risk Diversification.
Module 2 Time Value of Money & Investment Decisions Time Value of money and Investment
Decisions- Process of compounding Process of discounting - Future value of Single cash flow
and annuity - Present value of a single cash flow and annuity. Investment Decisions: - Capital
budgeting Process of capital budgeting - selection of projects - Estimation of cash flows -
Payback and Discounted payback period - Accounting rate of return- NPV IRR Capital
Budgeting decisions under risk - Capital Rationing - Project selection under rationing.
Module 3 Finance Decisions Financing and Capital Structure Decision: Sources of Finance:
External and Internal financing. Cost of different sources of capital Weighted average cost of
capital (WACC) and Marginal cost of capital. Capital structure decisions meaning and pattern
Theories of capital structure- Net income approach - Net operating income approach- Traditional
approach-MM approach - Optimum capital structure. Leverage - operating, financial and
composite leverage.
Module 4 Dividend Decisions Dividend Decisions: Dividend policy dividend and its forms
objectives of dividend policy relevance and irrelevance. Theories of dividend decisions:
Walters Approach Gordons Approach MM Approach
Module 5 Working Capital Management of Working capital: Meaning and Need of Working
capital - factors affecting composition of working capital Inter dependence among components
of working capital Estimation of working capital Cash management- Cash flow statement
and fund flow statement- Receivables management.