Programme : M COM
Course Code : COC 121
Course Title : Advanced Financial Management
Number of Credits :4
Effective from AY : 2020-21
Need of the Course : This course will enable to the student to understand how corporations make
important investment and financing decisions, and how they establish working
capital policies. The course also lays a foundation for more complex financial
topics that arise in additional elective courses in finance. This course in
financial management describes the corporation and its operating environment;
it will help any future manager to understand how the finances of a company
work, and how they will be interfacing with finance.
Description of the : This course is designed to provide fundamental knowledge about the finances
Course and management of finances of the company linked to the long term and short
term decisions. The course provides an ability to manage and run a small
company or organization, understanding its competitive and institutional
positioning and identifying its strengths and weaknesses and also ability to
evaluate the situation and the foreseeable evolution of the company based on the
relevant records of information.
Objectives of the : To provide fundamental knowledge about the finances and management of
Course finances of the company.
To enable the students to understand the process of financial decision making to
To understand the techniques of financial management and apply the techniques
in financial decision making.
To understand the concept and techniques of earnings management and
financial reporting.
Course Content
Unit 1 :Introduction to Financial Management 12 hours
Introduction Meanings and Definition - Goals of Financial Management - Finance Functions - Interface
between Finance and Other Business Functions Time Value for Money Valuation of Bonds and
Shares.
Unit 2 :Financing and Investment Decisions 14 hours
Introduction - Meaning of Cost of Capital - Cost of Different Sources of Finance - Weighted Average
Cost of Capital Leverage - Operating Leverage - Application of Operating Leverage - Financial
Leverage - Combined Leverage - CAPITAL STRUCTURE Introduction - Factors affecting Capital
Structure - Theories of Capital Structure (Including problems). CAPITAL BUDGETING - Introduction -
Capital Budgeting Process - Investment Evaluation - Appraisal Criteria - Capital Budgeting Techniques.
(Including problems). RISK ANALYSIS IN CAPITAL BUDGETING - Risk adjusted Discount Rate -
Certainty Equivalent Approach - Probability Distribution Approach -Sensitivity Analysis Scenario
Analysis- Simulation Analysis - Decision Tree Approach (Including problems).
SYLLABUS 7
Unit 3 :Working Capital and Dividend Decisions 12 hours
Concepts of Working Capital
- Operating Cycle - Determinants of Working Capital - Approaches for Working Capital Management -
Estimation of Working Capital - Working Capital and Bank Finance. [Includes practical problems].
CASH MANAGEMENT - Motives for Holding Cash - Objectives of Cash Management - Models for
determining Optimal Cash Needs - Cash Planning - Cash Forecasting and Budgeting. [Includes practical
problems]. Inventory Management: Purpose of Inventory - Costs Associated with Inventories - Inventory
Management Techniques - Importance of Inventory Management Systems Receivables Management:
Introduction - Costs associated with maintaining Receivables - Credit Policy Variables - Evaluation of
Credit Policy Dividend Decisions - Theories of Dividends Relevancy Models
Irrelevancy Model - Miller and Modigliani Model - [Includes practical problems].
Unit 4 :Business Valuation and Earnings Management 10 hours
Conceptual Framework of Business Valuation, Approaches/Methods of Valuation and other Approaches
to Value Measurement; Earnings Management (EM) concept and definition, objectives and motives of
EM, Techniques of EM, means to Check Window Dressing through EM, Corporate Frauds under
Companies Act, 2013
Pedagogy : Lecture/ Classroom Discussion/ Presentation/ Case Study/ Group Project or a
combination of some of these. Sessions shall be interactive in nature to enable
peer group learning.
Reference/Readings : Khan, M.Y & Jain, P.K.: Financial Management; Tata McGraw Hill, New
Delhi, 2008.
Pandey, I. M.: Financial Management; Vikas Publishing House, New Delhi,
2005.
Chandra, Prasana: Financial Management; Tata McGraw Hill, New Delhi,
2008.
Brealey and Meyers: Principles of Corporate Finance; Tata McGraw Hill, New
Delhi, 2008.
Keown, Martin, Petty and Scott (Jr): Financial Management; Principles and
Applications; Prentice Hall of India, New Delhi, 2002.
Gitman, L.J: Principles of Managerial Finance; Addison Wasley, 2009.
Vanhorne, James C: Financial Management and Policy; Prentice Hall of India,
New Delhi, 2002.
8. Kishore Ravi, M: Financial Management; Taxman, 2006
Course Outcome CO1 Gain expert knowledge of principles and concepts used in finance;
CO2 be able to find out the best course of action among several financial
options;
CO3 gain the understanding to apply financial concepts and principles in
overall management of an enterprise;
CO4learn to manage short-term resources of a business firm; and
CO5 have an idea as to how financial management decisions are taken in the
Public sector undertakings
CO6 gain understanding of the concept of Earnings management.
SYLLABUS 8