BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, PILANI, K. K.

BIRLA GOA
CAMPUS
INSTRUCTION DIVISION
2018-2019 - First Semestre
Course Handout

Course: Financial Management Date: 02/08/2018

Instructor in Chief: Dr. Ritika Jaiswal. Instructor: Rammohan Menon

1. Scope & Objective Of The Course

Every business encounters certain inherent questions such as

 What capital investments should one make? i.e., what kinds of real estate, machineries,
R&D Programmes, I.T. infrastructure, and so on should one invest in?
 How should one raise money to pay for the proposed capital investments? i.e., what will
be the mix of equity and debt in your financial planning?
 How will one handle the day-to-day financial activities like collecting receivables and
paying your suppliers?
While these are not the only concerns of Financial Management, they certainly are the central
ones. This course shall discuss the theories, analytical methods and practical considerations that
are helpful in addressing issues in Financial Management, the understanding of which has
become of great significance in recent times.

2. After completing this course the students shall be able to:

 Build understanding of central ideas and theories of modern finance.

 Develop familiarity with analytical techniques helpful for financial decision making
 Develop an understanding of the environment in which financial decisions are taken.
 Identify, evaluate and implement investment decisions such as to make optimum use of
the capital employed.
 Analysis of cost and key factors to optimize return

On a more basic level you should also be able to answer the following questions:

 What is Capital budgeting? And it’s relevance.

 How critical is working capital management? And what are its essential components.
 How is financial performance analysed?
 What is time value of money? How does it influence investment options?

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 3. Comprehensive Course Plan:

Lectur Learning Objectives Topics to be covered

e No.

1-2 Overview of Accounting Introduction to Accounting theory and process. Generally

Accepted Accounting Principles(GAAP).

3-5 Financial Statement And Balance Sheet, Profit And Loss Account, Statement Of
Cash Flow Cash Flow and fund flow

6-9 Financial Statement Analysis Types Of Financial Ratios, Liquidity Ratios, Leverage
Ratios, Turnover Ratios, Profitability Ratios, Valuation
Ratios, Study Of Comparison With Industry Averages,
Time Series Analysis And Common Size Analysis.
Prediction of Bankruptcy

10-13 Cost of Capital Cost of Debt, Equity and Preference shares, WACC.

Valuation of Shares and Debt

14-16 Working Capital Working Capital Policy includes, Characteristics Of

Management Current Assets, Factors Influencing Working Capital
Requirements, level of current assets financing policy,
Operating Cycle Analysis. Sources of working capital
finance

17-18 Cash and Liquidity Cash budgeting, long term cash forecasting, report for
Management control, cash collection and disbursement, Investment of
surplus.

19-21 Inventory Management Need For Inventories, Order quantity – EOQ Model,
Order Point, Pricing of Raw materials and Valuation Of
Stocks, Monitoring and Control of Inventories, Criteria for
judging Inventory Management.

22-24 Time Value of money Concept of Present value, Compounding, annuities, loan
amortization

25-28 Capital Budgeting Techniques of Capital Budgeting which includes capital

budgeting process, project classification, investment
criteria, NPV, IRR

29-31 Long Term Financing Raising long term finance through venture capital, initial
public offer, etc. Sources of long term finance such as
equity.

32-36 Capital Structure Decision EBIT – EPS analysis, ROI –ROE analysis, Guidelines for
capital structure planning. Financial and operating
Leverage. Dividend Policy

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37-40 Short term decision making Cost Analysis, P/V ratio, Break Even Pont, Key factor

4. Instructional Materials

The reading of some parts of the book is compulsory. As additional bibliography, the following
textbooks have been recommended for further study and reference:

1. “Financial Management Problem and Cases”, by M.Y.Khan and P.K.Jain. 6E

2. “Fundamentals of Financial Management”, by Dr. Prasanna Chandra

The following websites are suggested to refer for some valuable input for the study and
analysis.
1. http://www.sebiedifar.nic.in
2. http://www.icai.org
3. http://www finance.yahoo.com
4. http://www moneycontrol.com
5. http://www businessfinancemag.com
6. http://www cpafinder.com/accounting
7. http://www indialedger.com
8. http://www india-financing.com
9. http://www icma.in

5. Conduct of Course

This course will be conducted in a lecture, Presentations, case study and problem solving
approach. The professor discusses the concepts, underlining principles and the application of
those theories and principles to the practical applications of real life.

6. Evaluation method

Elements in grading of the students’ performance in the course will be based on the following
criteria:

Activity Percentage
Project & Assignments: 20%
Case Analysis 10%
Mid Sem Exam 30%
Term End Exam: 40%
Total 100%

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 7. Examinations & Quizzes

Examinations and quizzes will test your understanding of the textbook readings and problems.
Not all the assignment will be collected for grading.

8. Participation

Much of our success in this course is dependent upon an active learning climate in the
classroom. You should be willing to give your opinions, question the concepts presented, and
present your analysis of the problems and cases we will cover in class. You will also be asked to
participate in work groups in class assignments and in a project. Class participation will also be
affected by your involvement in your groups.

9. Disclaimer

This is only Tentative Course Outline. The professor reserves the right to modify the schedule,
if deemed necessary. Any changes to the course-outline will be announced in advance.

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