Module                       : FIN 201: Introduction to Corporate Finance and Financial        Management

Programme                : B.Com/BBA

Credit Value              : 12

Prerequisite                : None

General Objectives:     

• To develop the basic skills and understanding of financial management.
• To develop a logical understanding Leverage and capital structure.
• To understand the basics of Risk and Return.
• To understand the concept of Time Value of Money and Capital Budgeting Decisions.

Learning Outcomes:      

By the end of the module, students should be able to:

• Explain various concepts of Financial Management.
• Discuss the basics of capital structure theory.
• Explain the basics of Risk and return concept.
• Demonstrate basic investment/capital budgeting decision making skills.

CONTENT

Unit-I: Nature of Financial Management                                                                      (6 Hours)

Scope of Finance & Financial Management, Finance Functions, Financial Manager’s Role, Objective of Financial Management, Organization Chart of Finance Dept.

Unit-II: Time value of money                                                                                          (6 Hours)

Future Value: one –period case, multiple –period case; future value and compounding; present value and discounting:  perpetuity, annuity and mortgages.

Unit-III: Risk and Return concept                                                                                 (8 Hours)

Expected return and risk of single asset and portfolio, Portfolio Variance, systematic and unsystematic risk and Beta, beta estimation, determinants of beta

Unit-IV: Introduction to Fixed Income Securities                                             (6 Hours)

Types of fixed income instruments and basics of bond and bond valuation, introduction to interest rate risk, Zero Coupon Bonds, Fixed and Floating rate bonds. (student will also be introduced to the Government and corporate bonds)

Unit-V: Capital Budgeting Decisions                                                                            (12 Hours)

Meaning and Importance of Investment Decisions, Types of Investment Decisions,

Techniques for Evaluating Investment Proposals (Discounted Cash Flow Methods-NPV,

PI, IRR; Non-Discounted Cash Flow Methods- Payback Period, ARR) Simple numerical exercises

Unit-VI: Financing Decisions                                                                                          (8 Hours)

Meaning & Importance of Capital Structure, Factors affecting Capital Structure Capitalization (Meaning, Theories of Capitalization, over & under Capitalization)

Unit-VII:  Dividend Policy Decision                                                                               (6 Hours)

Reasons for Paying Dividends, Considerations of Dividend Policy, Stability of Dividends, Forms of Dividends.

Teaching strategies

·         Lecture

·         Demonstration

·         Case studies

·         Group methods

Assessment                            

·         Assignments/Case Studies                      20%

·         Mid–Semester Exam                             30%

·         End–Semester Exam                              50%

                                                       Total 100%

Essential Texts:

a) Chandra, P. Financial Management-Theory & Practices (Tata-Mcgraw Hill: New Delhi)

b) Stephen A Ross, Randolph W Westerfield and Bradford D Jordon Fundamentals of Corporate finance, (McGraw Hill:  New Delhi)

C) Fundamentals in Financial Management by Rustagi

References:

a)      Van Horne, Financial Management & Policy (Pearson Education Asia)

b)      Pandey,I.M. Financial Management (Vikas: New Delhi)