Financial Management

Instructional Hours: 90 Credit: 4

Module I
Introduction-Meaning of Finance – Financial Management-Importance - Scope – Objectives – Profit
Maximization – Wealth Maximization – Finance Function -Role of Finance Manager-Financial
Management and other Disciplines- Concept of Time value of money- Discounting and compounding
(15 Hours)
Module II
Financing Decision - Sources of Finance – Equity – Debt – Preference- Retained earnings- Cost of
Capital-Concept- Importance- Measurement of Specific Costs– Cost of Debt – Cost of Preference Capital
– Cost of Equity – Cost of Retained Earnings – Capitalisation - Capital Structure-Meaning of Capital
Structure –Optimum Capital Structure- Factors Determining Capital Structure- Leverage-Meaning-
Types-Operating Leverage- Meaning and Computation -Financial Leverage- Meaning and Computation-
Composite Leverage- Meaning and Computation- Financial Risk and Business Risk. (Capital Structure
theories excluded) (30 Hours)
Module III
Investment Decision- Capital Budgeting – Meaning- Importance- Determination of Cash Flows –
Evaluation Methods –Traditional Techniques- Pay Back Period – ARR –Discounted Cash flow
techniques- NPV –IRR – Profitability Index – Discounted PBP- Interpretation of Results.
(20 Hours)
Module IV
Management of Working Capital - Meaning–Definition – Importance-Types of working capital- Gross
Working Capital- Net Working Capital- Factors Determining Working Capital–Estimation of Working
Capital Requirements- Methods (15 Hours)
Module V
Dividend Decision- Meaning- Types of Dividend-Dividend Policy-Conservative Vs Liberal Policy-Pay-
out Ratio- Retention Ratio- Factors Determining Dividend Policy- Bonus Shares- Stock Split and Reverse
Split. (Dividend theories excluded) (10 Hours)
Suggested Readings
1. Pandey, I. M., Financial Management, Vikas publishing House Pvt. Ltd.New Delhi.

2. Khan, M.Y. & Jain, P.K., Financial Management, McGraw Hill (India) Private limited;
New Delhi.
3. Rustagi, R. P., Financial Management, Theory, concepts and Problems, Galgotia Publishing
Company, New Delhi.
4. Prasanna Chandra, Financial Management, Tata McGraw Hill publishing company limited,
New Delhi.
5. OP Agarwal, Financial Management, Himalaya Publishing House, Mumbai
6. Raman B S, Financial Management- United Publishers
7. Srivastava, T. M., Financial Management, Principles and Problems, Pragatiprakashan, Meerut