IBS Hyderabad (Academic Year – 2019-20)

Course Handout
Course Title : Financial Management - II Semester: II
Faculty Name : Dr. Garima Sisodia Room No: F-203
Consultation Hours (Day/time): Monday 5.00-6.00 pm
Email: garimasisodia@ibsindia.org
Mobile No: 9666466987

Course Description:
Students examine the important tools and techniques useful in developing their decision-making skills in the context of a corporate firm. Topics include sources
of long-term and short-term; leverages; capital structure policies and decision; dividend policy and decision; inventory management; receivables management;
cash management; financial statement analysis and financial forecasting.

Course Objectives
At the end of the course, students are expected to:
• Apply various tools and techniques in the financial decision making activity.
• Differentiate between various sources of long-term and short-term finances available to a firm.
• Evaluate the concept of leverages, capital structure, dividend policy, inventory management, receivables management and cash management.
• Analyze the capital structure policies and decision, dividend policy and decision, inventory management, receivables management and cash
management.
• Asses the firm’s financial performance using various tools and techniques like ratio analysis, common size analysis, comparative statements analysis
and trend analysis.

Learning Outcomes
1. Develop required skills for sourcing of finance for a project.
2. Demonstrate analytical skills in financial decision making process.
3. Evaluate the financial performance of a firm using various tools.
4. Identify and implement strategies for maximizing shareholders’ wealth in a firm.

Recommended Text Book:

 Financial Management – Text and cases (Volume-I) by Prasanna Chandra, M Y Khan and P K Jain, 1st Edition, 2017, Mc Graw Hill Education
(India) Private Limited
 Financial Management – Illustrations (Volume-II) by Prasanna Chandra, M Y Khan and P K Jain, 1st Edition, 2017, Mc Graw Hill Education (India)
Private Limited
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 IBS Hyderabad (Academic Year – 2019-20)

Suggested reference books:

 Principles of Corporate Finance by Richard A. Brealey, Stewart C. Myers, Franklin Allen, 12th Edition, 2017, Mc Graw Hill Education (India)
Private Limited
 Fundamentals of Financial Management by Eugene F. Brigham, Joel F. Houston, 14th Edition, 2016, Cengage Learning
 Corporate Finance by Stephen A. Ross, Randolph W. Westerfield, Jeffrey F. Jaffe, Bradford D. Jordan, Ram Kumar Kakani, 11th Edition, 2017, Mc
Graw Hill Education (India) Private Limited

Case /Reading
Session
Topic Key Concepts Learning Outcomes article/ Lecture Chapters Digital Tools
No.
/ Activity

Issuance of Shares through

https://ocw.mit.edu/courses/sloan-school-of-
– (IPOs, Rights Issue,  Identify &
management/15-414-financial-management-summer-
Private Placement, Bought- compare/contrast
Sources of RIL: Global Chapters- 2003/index.htm
out Deal); Preference the features of
01-03 Long-Term Financing 11, 12 & MIT Open Courseware: Lecture Notes under Part-4:
Capital, Debenture Capital, various sources of
Finance Choices 13 Financing Policy.
Term Loans, Hire-Purchase long-term finance
Description:
and Lease, Venture Capital, used by a firm.
1. Raising Capital
Private Equity
 Understand the
concepts of https://swayam.gov.in/courses/277-financial-
Measuring and Analyzing operating, financial management
leverages - Operational, and combined/total Chapter- Swayam Videos Lectures: Week-7 of the course
04-05 Leverages
Financial and Total leverage. 15 ‘Financial Management’.
Leverage  Appreciate the Description:
implications of 1. Leverage Analysis and EBIT-EPS Analysis
leverages.
06-08 Capital Capital structure Theories -  Appreciate the Chapter- https://swayam.gov.in/courses/277-financial-
Structure and Traditional Approach, NI relationship 16 management
Firm Value approach, NOI approach & between capital Swayam Videos Lectures: Week-9,10 of the course
MM approach, Factors structure and ‘Financial Management’.
Affecting Capital Structure firm’s value. Description:
Decisions  Understand the 1. Capital Structure Theories Part-I
various approaches 2. Capital Structure Theories Part-II

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 IBS Hyderabad (Academic Year – 2019-20)
to capital structure.
 Understand the
Business, financial and
various types of
market risk, total risk ,
risks. https://swayam.gov.in/courses/277-financial-
Determinants of capital
 Enumerate management
Capital structure, Approaches to
determinants of Chapter- Swayam Videos Lectures: Week-6 of the course
09-10 Structure estimating target capital Adarsh Relays
capital structure. 17 ‘Financial Management’.
Policy structure, variables in
capital structure, ROE -  Analyze the EBIT- Description:
EPS relationship 1. Cost of Capital Part-II and EBIT-EPS Analysis
ROI Analysis, EBIT - EPS
analysis under different
financing plans.
Sessions 1 to 10
11 TEST-1
Chapters covered - 11, 12, 13, 15, 16, 17
 Understand the https://swayam.gov.in/courses/277-financial-
working capital management
Overview of Working Capital Concepts Working Capital
concepts and Swayam Videos Lectures: Week-12 of the course
Working – GWC, NWC, Working management in Chapter-
12-14 operating cycle. ‘Financial Management’.
Capital Capital Gap; Components FMCG 20
 Identify the factors Description:
Management of Operating Cycle companies
influencing 1. Dividend in Practice and Working Capital
working capital. Management
 Understand the
need and nature of
inventory.
 Analyze inventory https://swayam.gov.in/courses/277-financial-
Nature, Role and Purpose
problem as an management
of Inventory, Costs Dadu’s
Inventory investment Chapter- Swayam Videos Lectures: Week-14 of the course
15-16 Associated with Inventory, Dilemma: How
Management decision. 21 ‘Financial Management’.
Inventory Management much to order?
 Assess the Description:
Techniques
significance of 1. Management of Cash, Receivables and Inventory
carrying, ordering
and stock-out
costs.
17-18 Receivables Purpose of receivables and  Comprehend the Receivable Chapter- https://swayam.gov.in/courses/277-financial-
Management costs of receivables, credit terms of payments Management at 22 management
policy and monitoring widely used in Anthony Fast Swayam Videos Lectures: Week-14 of the course
receivables practice. Food Ltd. ‘Financial Management’.
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 IBS Hyderabad (Academic Year – 2019-20)
 Realize the need
and goals of
establishing a
sound credit
Description:
policy.
1. Management of Cash, Receivables and Inventory
 Understand
various methods of
monitoring
receivables.
Sessions 12 to 18
19 TEST-2
Chapters covered - 20, 21, 22
https://onlinecourses.nptel.ac.in/noc19_mg04/course
Swayam Videos Lectures: Week-6,7&8 of the course
Financial Statements –  Comprehend and
‘Financial Statement Analysis and Reporting’
Need and Importance, assess the firms’
Financial Description:
Common Size Analysis, financial Chapter-
20-23 Statement Nestle India Ltd. 1. Tools and techniques of financial statement analysis,
Comparative Analysis, performance using 25
Analysis Ratio Analysis.
Trend Analysis, Ratio various tools and
2. Ratio Analysis, Cash flow statement.
Analysis techniques.
3. Comparative Statement, Common Size Statement, Du-
Pont Analysis.
 Realize the
importance of
dividend policy
and its impact on
https://swayam.gov.in/courses/277-financial-
firm value.
Dividend Policies; management
Dividend  Understand the
Dividend Theories - Chapter- Swayam Videos Lectures: Week-11 of the course
24-26 Policies & logic of dividend Swavalamban
Traditional, Walter, 18 ‘Financial Management’.
Theories irrelevance.
Gordon and MM theories Description:
 Enumerate the 1. Dividend Decision
market
imperfections that
make dividend
policy irrelevant.
27-28 Cash Cash management, Cash  Identify the Sen’s Chapter- https://swayam.gov.in/courses/277-financial-
Management Budget and playing the motives and needs sensibility: 23 management
float for holding cash. Managing cash Swayam Videos Lectures: Week-14 of the course
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 IBS Hyderabad (Academic Year – 2019-20)
 Understand the
techniques for
preparing cash
budget. ‘Financial Management’.
 Enumerate the flow Description:
factors that 1. Management of Cash, Receivables and Inventory
determine the
required cash
balances.
 Assess the benefits
and costs of trade https://swayam.gov.in/courses/277-financial-
Behavior of current assets credit. management
Financing and pattern of financing  Understand the Chapter- Swayam Videos Lectures: Week-13 of the course
29
Current Assets current assets, current asset norms used by 24 ‘Financial Management’.
financing instruments banks in financing Description:
a firm's working 1. Working Capital Financing
capital needs.
https://www.mooc-list.com/course/entrepreneurship-ii-
practices-and-approaches-coursera
 Appreciate the
Entrepreneurship II: Practices and Approaches
difference between
(Coursera)
financial
Sales Forecast, Preparation Description:
forecasting and
of Proforma Income Module-2: Financial Planning
Financial financial planning. Chapter-
30 Statement and Balance https://www.mooc-list.com/course/financial-decision-
Forecasting  Understand the 26
Sheet, Growth and External making-edx
requirement of
Fund Requirement Financial Decision Making (edX)
external financing Description:
and sustainable 1. Financial Statements: Make more informed decisions
growth rate. understanding and analyzing financial statements
2. Budgeting & Forecasting
Using company’s data from PROWESS database,
each group (10 students) is required to present on
various financial ratios. Show the student how to:
31-33 Project Work Parameters for evaluation:  access and collect the data from databases like Prowess and Capitaline Plus.
Financial Statement Analysis, Comparison of ratios  perform calculations in excel, report writing and presentation using power point.
with industry standard and with its competitor’s
ratios along with interpretation and suggestions.
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 IBS Hyderabad (Academic Year – 2019-20)

Expectations from Students

a. Students must report to the respective sessions well before the announced time. Latecomers will not be permitted to join the class after the scheduled
time. If late, the attendance for that session will be marked as absent.
b. Read the Case Study / material well prior to the class discussion. He/she is also expected to read the chapter indicated in the course plan as the faculty
directs.
c. In the class discussion student is expected to participate actively and contribute to individual and group learning. Evaluation is based on active
participation.

Evaluation Timelines
Keeping in line with continuous evaluation at IBS the following evaluation schedule has been drawn. Students are expected to go through the dates /
sessions mentioned and prepare accordingly.

Component Component Expected slot / Marks Weightage

Number due date declaration by
th
Test I 1 11 session 13th session 15
Test II 2 19th session 22nd session 20
Project report 3 31-33 session 33rd session 15
rd
Class Participation 4 33 session 33rd session 10
End exam At the end of Exams dept Exams dept 40
the semester shall plan and shall plan and
communicate communicate
Total 100

Electronic and Web resources: Swayam Videos, Syndicated Databases

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