UNIT I
Financial Management: Meaning, nature and scope of finance; Financial goal - profit vs. wealth maximization; Finance functions - investment, financing and dividend decisions.
UNIT II
Capital Budgeting: Nature of investment decisions; Investment evaluation criteria - net present value, internal rate of return, profitability index, payback period, accounting rate of return: NPV and IRR comparison; Capital rationing; Risk analysis in capital budgeting. Cost of Capital: Meaning and significance of cost of capital: Calculation of cost of debt, preference capital, equity capital and retained earnings; Combined cost of capital (weighted); Cost of equity and CAPM;
UNIT III
Operating and Financial Leverage: Measurement of leverages; Effects of operating and financial leverage on profit; analyzing alternate financial plans; Combined financial and operating leverage. Capital Structure Theories: Traditional and M.M. Hypotheses - without taxes and with taxes; Determining capital structure in practice.
UNIT IV
Dividend Policies: Issues in dividend decisions, Walter's model. Gordon's model. M-M hypothesis. dividend and uncertainty, relevance of dividend; dividend policy in practice; Forms of dividends; stability in dividend policy; Corporate dividend behaviour.
UNIT V
Management of working Capital: Meaning, significance and types of working capital: Calculating operating cycle period and estimation of working capital requirements; Financing of working capital and norms of bank finance; Sources of working capital: Factoring services; Various committee reports on bank finance; Dimensions of working capital management.
REFERENCES:
1. Brealey, Richard A and Steward C. Myers: Corporate Finance, McGraw Hill, lnt. Ed., New York. 2. Chandra, Prasanna: Financial Management, Tata McGraw Hill, Delhi.
3. Hampton, John: Financial Decision Making, Prentice Hall, Delhi.
4. Bhattacharya, Hrishikas: Working Capital Management: Strategies and Techniques, Prentice Hall, New Delhi.
5. Pandey, I.M: Financial Management, Vikas Publishing House, Delhi.
