ICFAI University - Financial Management

 Financial Management

Max Marks: 100, Duration: 3 Hrs

Introduction to Financial Management:  Nature and Objectives of Financial Management – Role of the Finance Manager – Interface of the Finance Function with other Functional Areas – Environment of Corporate Finance.

Indian Financial System: Introduction to Indian Money Markets – Money Market Instruments – Introduction to Capital Markets - Primary and Secondary – Government Securities Market - Primary, Secondary and Instruments – Financial Institutions – Nature of Commercial Banks and Theory of Banking Operations – Creation of Credit by Commercial Banks – Introduction to Credit Cards – Financial Sector Reforms - Privatization – Classification of NBFCs.

Time Value of Money: What Time Value of Money Means? – Why Money has Time Value? – Process of Compounding – Process of Discounting – Future Value of a Single Flow – Future Value of Multiple Flows – Future Value of Annuity – Present Value of a Single Flow – Present Value of Uneven Multiple Flows – Present Value of Annuity.

Risk and Return: The Concepts of Risk and Return – The Components of Return – Measurement of Rate of Return – The Relation between Risk and Expected Rate of Return – Sources of Risk – Risk in a Portfolio Context – Diversification - Diversifiable and Non-diversifiable Risk - Measurement of Non-diversifiable Risk – Capital Asset Pricing Model.

Valuation of Securities: Valuation of Bond – Bond Price Movements – Equity Valuation: Dividend Capitalization Approach – Equity Valuation: Ratio Approach.

Introduction to International Finance: The Need to Study International Finance – Meaning and Implications of Globalization – Integration of Financial Markets – Reasons, Benefits and Costs.

Theories of International Trade:  Various Theories of International Trade – Developments on the International Trade Front – Trade Barriers – Regulation of International Trade.

International Monetary System: Different Types of Exchange Rate Mechanisms – The Gold Standard – The Gold Exchange Standard – The Bretton Woods System – Current Monetary System – European Monetary Union.

Balance of Payments:  Concept of Balance of Payments – Concepts and Principles behind compilation of BoP Account – Components of BoP and the Factors affecting them – Importance and Limitations of BoP Statistics – Relationship of BoP with other Economic Variables.

The Foreign Exchange Market: The structure of the Forex Market – Different Types of Quotes – Various Kinds of Transactions and their settlement Dates – The Regulations.

Exchange Rate Determination: Purchasing Power Parity – Interest Rate Parity.

Sources of Long-Term Finance: Need for Long-Term Finance – Introduction to Cost of Project and Means of Finance – Important Sources of Long-Term Finance – Features of Share Capital, Preference Capital, Debentures and Term Loans – Other Sources of Long-Term Finance.

Cost of Capital and Capital Structure Theories: The Meaning of Cost of Capital – Costs Associated with the Principal Sources of Long-term Finance – Concept of Weighted Average Cost of Capital – Weighted Marginal Cost of Capital Schedule – Meaning of Capital Structure – Factors affecting the Capital Structure – Theories of Capital Structure.

Dividend Policy: The Dividend Decisions of a Firm-Relevance/Irrelevance – Models explaining the Relevance/Irrelevance of the Dividend Policy.

Capital Expenditure Decisions: Nature of the Investment or Capital Expenditure Decisions  – Scanning and Identification of Investment Opportunities – Criteria for Preliminary Screening – Other steps of Project Management like Feasibility Study, Implementation and Performance Appraisal – Introduction to Network Techniques for Project Planning and Control – Principles underlying Measurement of Costs and Benefits – Preparing Cash Flow Projections for Projects – Assessing the Financial Viability of Projects using the various Appraisal Criteria.

International Project Appraisal: Various Methods of Appraising International Projects.

Working Capital Management: The Meaning of and Need for Working Capital  – Various Components of Current Assets and Current Liabilities – Static vs Dynamic view of Working Capital – Factors Affecting Composition of Working Capital – Objective of Working Capital Management - Liquidity vs. Profitability and Working Capital Policies  – Interdependence among Components of Working Capital – Estimation of a Firm’s Working Capital needs using the Operating Cycle – Measures for Evaluation of Working Capital Management – Some Important Working Capital Ratios.

Financing Current Assets: Behavior of Current Assets and Pattern of Financing  – Spontaneous Sources of Finance  – Trade Credit  – Short-term Bank Finance  – Public Deposits for Financing Current Assets – Commercial Paper and Factoring  – Regulation of Bank Credit - Marathe Committee Recommendations - Kannan Committee Recommendations -Nayak Committee Recommendations

Inventory Management: The Nature of Inventory and its Role in Working Capital – The Purpose of having Inventories – Types of Inventory and Costs Associated with it – Inventory Management Techniques like determination of Economic Order Quantity, Economic Production Quantity, Re-order Point, Stock Level, etc. – Inventory Planning – Introduction to Specialized Techniques like ABC Analysis and VED Analysis – Various methods of Pricing of Inventories.

Receivables Management: Meaning and Computation of Receivables  – Purpose and cost of Maintaining Receivables – Impact of a Firm’s Credit Policy on Level of Investment in Receivables, Level of Sales, Bad Debt Loss, etc. – How Firms Evaluate Creditworthiness of Customers – Decision Tree for Credit Granting – Monitoring of Receivables.

Cash Management: The Difference between Profits and Cash – Need For and Objective of Cash Management – Short-term Cash Forecasting and Cash Budgets – Cash Reports for Monitoring and Control – Factors to be Reckoned with for Efficient Cash Management – Forms of Liquidity and the Choice of Liquidity-mix.

Mergers and Acquisitions: The Five Waves of Merges – Models of Corporate Combinations – Models of Corporate Downsizing – Market for Corporate Control – Anti-takeover Defences.

Introduction to Exchange Risk: Foreign Exchange Exposure  – Foreign Exchange Risk – Types of Exposure.

Futures: History of Futures Markets – Meaning and Definition  – Mechanism of Futures Markets – Objectives of Futures – Futures Prices – Types of Futures.

Options: Concept of Options – American and European Options – Trading Strategies with Options – Option Pricing Models – Exotic Options.

Financial Swaps: The Concept of Financial Swaps  – Interest Rate Swaps – Options on Swaps – Commodity Swaps, Currency Swaps – Pricing of Swaps.

Management of Exchange Risk: Techniques of Managing Transaction and Translation Exposures – Techniques of Managing Economic Exposure.

Asset-Liability Management: Risks in Banking – Approaches to Risk Management – Risk Management Process – Asset-Liability Management and its Purpose – Foreign Exchange Risk Management.

Current Developments