Financial Management - II

Paper Code: 
MBA- 325
Credits: 
4.0
Contact Hours: 
40.00
Max. Marks: 
100.00
Objective: 
  • To familiarize the students with the financial aspects of managerial decisions and to develop the skills to determine capital structure and other financial policies.
8.00
Unit I: 
Investment Decision

Capital Budgeting Process, Basic Principles of Capital Expenditure Proposals, Various appraisal Methods-Average Rate of Return, Pay back Period DCF Methods. NPV, IRR and Profitability Index, Merits and Demerits of Appraisal Methods, Conflicts in Decision Making, Investment Appraisal Methods in Practice.

9.00
Unit II: 
Capital Structure

Basic Issues, Irrelevance Approach, Relevance of Capital Structure Determination of Optimal Capital Structure, Features of Sound capital Structure, Planning the Capital Structure, Capital Structure Theories- Net Income Approach, Net Operating Income Approach, Traditional Approach, Modigliani- Miller Approach.

9.00
Unit III: 
Cost of Capital

Significance, Computation, Composite or Overall or Weighted Average and Marginal cost of capital

8.00
Unit IV: 
Dividend Policy Decision

Introduction, Modigliani and Miller (MM) Hypothesis, Walter’s Model, Gordon’s Model, Determinants of Dividend Policy

6.00
Unit V: 
Leverage

Meaning of Leverage, Operating Leverage, Financial Leverage, EBIT- EPS Analysis, Indifference Point, Combined Leverage

Essential Readings: 
  • Prasad G. Godbole, Mergers, Acquisitions. And Corporate Restructuring, Vikas Publication Private Limited, 2009
  • Prasanna Chandra, Financial Management, Tata McGraw Hill, 2007
  • Paresh P. Shah, Financial Management, Biztantra Publication, 2007
  • Khan and Jain, Financial Management, Tata Mc Graw Hill, 2007
References: 
  1. Kothari & Dutta, Contemporary Financial Management, Machanilan India Ltd, 2008
  2. Mukherjee and Hanif, Corporate Accounting, Tata McGraw Hill,2006
  3. Stephen A Ross, Fundamentals of Corporate Finance, 2007
  4. Kester, Case Problems in Finance, Tata McGraw Hill, 12th  Edition, 2008