COURSE OUTLINE

COURSE NAME: Corporate Finance

COURSE CODE: MBDS5013

Programme MBA
Academic Session 2022-24
Semester II
Credits 3
No of Sessions 45
Prerequisite Fundamentals of financial and cost
accounting

MBA Educational Outcomes: (PEOs)

PEO1 Graduates shall grow personally and professionally to be successful business leaders in the
dynamic business environment globally.

PEO2 Graduate shall lead with creative, analytical and entrepreneurial skills to enable
organizations achieve a competitive advantage.

PEO3 Graduate shall contribute as socially and ethically responsible citizen for the sustainable
development of environment and society at large.

Learning Goals/Programme Outcomes

Graduates from the MBA programme of the SOB shall possess:

PO1 Apply knowledge of management theories and practices to solve business
problems.
PO2 Foster analytical and critical thinking abilities for data-based decision making.
PO3 Ability to develop Value based Leadership.
PO4 Ability to understand, analyze and communicate global, economic, legal, and
ethical aspects of business.
PO5 Ability to lead themselves and others in the achievement of organizational goals,
contributing effectively to a team environment.
PO6 Ability to conduct investigation of complex problems using modern tools and
techniques.
PO7 Apply the various forms of business communication, supported by effective use of
appropriate technology, logical reasoning, articulation of ideas.
PO8 Apply innovative ideas and knowledge of business project management principles
as an entrepreneur/team member/ team leader to develop and manage projects in
multidisciplinary environments.
Course Overview
Corporate Finance is the application of financial theory to practice with an aim of ensuring
that business decisions meet their intended goal. It is through a corporate finance decision
that a business requires to access and utilize scarce resources to ensure optimal performance
of the same to generate revenues and profits. The application of dividend theories assists
management in decision making concerning optimum dividend distribution and retained
earnings in the firm. Therefore, the knowledge and the understanding of corporate finance
concept and theories are essential to better manage and control the business functions in the
organizational settings.

This course aims at introducing the application of Corporate Finance, Agency Problem, Time
Value of Money, Capital Budgeting Decisions, Leverage and it’s types, dividend decisions
and other working capital concepts for firms. This course provides a complete understanding
of basic Finance concepts and to use these concepts in the decision-making process of firms.

Course Objectives

1. This course will enable the students to identify and explain concepts and theories related to
Corporate Finance, industry trends and firm structures, social norms, and government
policies.

2. Students will be able to integrate theoretical knowledge with practical application in order
to explain risk and return associated with CAPEX and OPEX decisions.

3. The learners will be able to evaluate the ROI from different projects and hence will be able
to allocate resources in practical scenario.

4. The course will help in developing financial plans for various industries considering
current corporate finance practices

Course Outcomes
After completing the course, students would be able to:

CO1 Understand the concept and objectives of Corporate Finance matics of Finance for
estimation of Risk and Return for Valuation. K3
CO2 Analyze and evaluate the relationship between Investment, Financing and Dividend
Decisions with reference to Valuation of Business. K4
CO3 Analyze and evaluate the ROI from different projects and hence will be able to
allocate resources in practical scenario. K5
CO4 To develop a strategic plan with reference to various decisions of Corporate Finance
on the basis of analysis of past two years data of various industry segments. K6
CO5 Analyze and Evaluate the Working Capital Requirement of a Business and develop a
plan within the regulatory framework for financing of the same with special focus on
 Inventory, Receivables and Cash. K5

CO-PO matrix
3/2/1 indicates strength of correlation where 3-Strong, 2-Medium, 1-Low

CO/PO PO1 PO2 PO3 PO4 PO5 PO6 PO7 PO8

CO1 2 3 2

CO2 3 2 2

CO3 3 2 2

CO4 2 2 2

CO5 2 2 2

Unit I : Introduction to Corporate Finance 9 Lectures

Introduction- Nature of Corporate Finance, scope of finance, finance function, finance
managers role in the changing world, financial goal: profit maximization Vs wealth
maximization. Agency theory, Time Value of money-concept of annuity: , computation of
future value and present value of cash flows, preparation of schedule of loan amortization
CASE STUDY: Rise like Phoenix, Adapted from
http://www.thehindubusinessline.com/industryand- economy/info tech/article2647700.ece?
css=print

Unit II : Risk and Return and Investment Decisions 14 Lectures

Cost of capital-concept, determinants, significance & computation of cost of debt, cost of
preference shares, cost of equity capital, weighted average cost of capital (book and market
value). Capital Budgeting: Techniques of capital budgeting-simple and discounted payback
period, ARR, NPV, IRR , MIRR, PI calculation of cash flows. Estimation of incremental cash
flow, Capital rationing, Risk Analysis in capital budgeting- (risk adjusted discount rate
method and certainty equivalent method, Sensitivity Analysis).
CASE STUDY: G.S Petropull Company (GSPC) I M Pandey, Case 8.1, 12 th Edition,
Pearson.

Unit III :Financing Decisions 10 Lectures

Leverage-Operating leverage, financial leverage, combined leverage, use of
leverage. Financial leverage and shareholder’s risk. Indifference point Capital
structure- conceptual aspects, Theories of capital structure. M-M theory, Agency
cost, pecking order, trade off and behavioral theory of Capital structure. Capital
structure practices and determinants.
CASE STUDY: Central Equipment Company, Case 14.1, I M Pandey, 12thEdition,
Pearson.

Unit IV: Dividend Decisions 5 Lectures

Dividend policies in practice, Forms of dividends: Cash dividend, Non cash dividend such as
Bonus shares, Share buyback, Right issue, Split and reverse split of shares
Dividend Theories: Walter, Gordon and M M Theories
Dividend practices of Indian companies.
CASE STUDY: Mini Case Turant Pharma, Problem 8, Ch 17, I M Pandey, 12thEdition,
Pearson

Unit V: Working Capital Management 7 Lectures

Concepts of Working Capital Management, Determinants and Estimation of
working capital, working capital cycle and cash cycle
Working Capital Financing
Inventory management, Cash Management, Receivable management.
CASE STUDY: Horniman Horticulture, Schill, M. J. (2017). Horniman Horticulture. Darden Business
Publishing Cases. (This case captures the cash-flow and working-capital management problems
typical of small, growing businesses)

Text Book

1. Pandey, I.M. (2021). Financial Management, 12thedition, Pearson.

2.M.Y. Khan, P. K Jain (2019). Financial Management, McGraw Hill Publication, 8th Edition

Reference Book
1. Damodran, Aswath (2007). Corporate Finance, 2nd edition, John Wiley & Sons, Inc.
2.Brigham & Houston (2015). Fundamentals of Financial Management, 13th edition,
Thomson Press.
3.Rustagi, R. P. (2018). Financial Management – Theory, Concepts, Problems, 6th edition,
Taxmann.

JOURNALS, NEWSPAPERS AND MAGAZINES:

1. IIM Bangalore Management Review
2. International Journal of Applied Research
3. Finance India, Indian Institute of Finance
4. International Journal of Managerial Finance, Emerald
5. Journal of Corporate Finance, Elsevier
6. Managerial Finance, Emerald

FULL CASES to be pasted here