IBS Hyderabad (Academic Year – 2023-24)

Course Handout
Course Code : SLFI502
Course Title : Financial Management - II Semester : II
Faculty Name : Dr. G V KESAVA RAO Room No : F-005
Mobile No : 9845056756 Email : kesavarao.gv@ibsindia.org
Consultation Hours (Day/time) : Tuesday, 15:00 to 16:00

Course Description:
The course would add to the conceptual knowledge of the students through the discussion of important financial topics such as sources of long-term and short-term finance;
leverages; capital structure policies and decision; dividend policy and decision; working capital management; inventory management; receivables management; cash
management; financial statement analysis and financial forecasting. The course would further help the students examine the important tools and techniques useful in enhancing
their critical thinking and developing decision-making skills in the context of a corporate firm. The course also requires the students to complete a comprehensive project on
financial statement analysis and important ratios of a firm in a real-life scenario that would enhance their report writing and presentation skills.

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
• Develop in-depth qualitative and quantitative analytical skills useful for financial decision-making.
• Critically think through a problem and generate a set of alternatives.
• Apply technical and digital literacies through applications of technology for decision-making in real-life situations.
• Develop required skills for sourcing of finance for a project.
• Evaluate the financial performance of a firm using various tools.
• Identify and implement strategies for maximizing shareholders’ wealth in a firm.

Recommended Text Book:

➢ Financial Management: Theory and Practice, Eugene F. Brigham, Michael C. Ehrhardt, 15th edition. Cengage Learning
Suggested reference books:
• Fundamentals of Corporate Finance by Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe, Bradford D. Jordan, and Ram Kumar Kakani, 12th Edition, 2021,
Mc Graw Hill Education (India) Private Limited
• Principles of Corporate Finance by Richard A. Brealey, Stewart C. Myers, Franklin Allen, 12th Edition, 2017, Mc Graw Hill Education (India) Private Limited
• Financial Management by I.M. Pandey, 12th Edition, Pearson
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 IBS Hyderabad (Academic Year – 2023-24)
Case /Reading
Session
Topic Key Concepts Learning Outcomes article/ Lecture Chapters Digital Tools
No.
/ Activity
Brief description of the course
01 Introduction Introduction to the course
content
Issuance of Shares through – https://ocw.mit.edu/courses/sloan-school-of-
(IPOs, Rights Issue, Private Identify & compare/contrast Cox management/15-414-financial-management-
Sources of Placement, Bought-out Deal); the features of various sources Communication Chapters summer-2003/index.htm
02-04 Long-Term Preference Capital, Debenture of long-term finance used by a s, Inc.—1999 18, 19 & MIT Open Courseware: Lecture Notes under Part-
Finance Capital, Term Loans, Hire- firm. (HBS Case ID: 20 4: Financing Policy.
Purchase and Lease, Venture Calculation of value of a right 9-201-003) Description:
Capital, Private Equity 1. Raising Capital
The Balancing
Understand the concepts of https://nptel.ac.in/courses/110/107/110107144/
Act: Financial
Measuring and Analyzing operating, financial and NPTEL Videos Lectures: Unit - 12 of ‘Financial
Leverage for Chapter
05-06 Leverages leverages - Operational, combined/total leverage. Management for Managers’.
Entrepreneurs 15
Financial and Total Leverage Appreciate the implications of Description:
(HBS case
leverages. 1. Capital Structure – Part I
ID:6563)
https://nptel.ac.in/courses/110/107/110107144/
Capital structure Theories -
Appreciate the relationship Blaine NPTEL Videos Lectures: Units-11&12 of
Traditional Approach, NI
Capital between capital structure and Kitchenware, ‘Financial Management for Managers’.
approach, NOI approach & Chapter
07-09 Structure and firm’s value. Inc.: Capital Description:
MM approach, Factors 15 & 21
Firm Value Understand the various Structure (HBS 1. Capital Structure –Part II
Affecting Capital Structure
approaches to capital structure. Case ID: 4040) 2. Capital Structure – Part III
Decisions
3. Capital Structure – Part IV
Business, financial and
Understand the various types
market risk, total risk, Winfield Refuse
of risks. https://nptel.ac.in/courses/110/107/110107144/
determinants of capital Management,
Capital Enumerate determinants of NPTEL Videos Lectures: Unit – 12 of ‘Financial
structure, approaches to Inc.: Raising Chapter
10-11 Structure capital structure. Management for Managers’.
estimating target capital Debt vs. Equity 15 & 21
Policy Analyze the EBIT-EPS Description:
structure, variables in capital HBS Case ID:
relationship under different 1. Capital Structure – Part V
structure, ROE - ROI 9-913-530)
financing plans.
analysis, EBIT - EPS analysis
12 TEST-1 Sessions 1 to 10

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 IBS Hyderabad (Academic Year – 2023-24)
Understand the working
Overview of Working Capital Concepts –
capital concepts and operating
Working GWC, NWC, Working
13-15 cycle.
Capital Capital Gap; Components of
Identify the factors influencing
Management Operating Cycle
working capital.
Understand the need and
nature of inventory.
Analyze inventory problem as
Nature, Role and Purpose of an investment decision.
Inventory Inventory, Costs Associated Assess the significance of
16-18
Management with Inventory, Inventory carrying, ordering and stock-
Management Techniques out costs.
Types of inventory
management – ABC, EOQ,
Safety Stock etc.
Comprehend the terms of
payments widely used in
practice.
Realize the need and goals of
Purpose of receivables and establishing a sound credit
Receivables costs of receivables, credit policy.
19-21
Management policy and monitoring Understand various methods
receivables of monitoring receivables.
Receivables Exchange of India
Ltd (RXIL)
Trade Receivables
Discounting System (TreDS)
22 TEST-2
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https://nptel.ac.in/courses/110/107/110107093/
NPTEL Videos Lectures: Units – 1,2&3 of
‘Working Capital Management’.
Description:
1. Introduction – I
Dell’s Working 2. Introduction – II
Capital (HBS Chapter 3. Nature of the Working Capital Management
Case ID: (9-201- 16 4. Approaches of Working Capital Management –
029) I
5. Approaches of Working Capital Management –
II
6. Operating Cycle
7. Working Capital Requirement Assessment - I
8. Working Capital Requirement Assessment - II
https://nptel.ac.in/courses/110/107/110107093/
NPTEL Videos Lectures: Units – 4&5 of
‘Working Capital Management’.
Description:
Gentle Electric
Chapter 1. Risk and Cost of Holding Inventory
Co. (HBS Case
16 2. Inventory Costs
ID: 9-672-038)
3. Inventory Behaviour
4. Inventory Management Methods and Strategies
5. EOQ Technique of Inventory Management
6. Stockouts cause Walkouts
https://nptel.ac.in/courses/110/107/110107093/
NPTEL Videos Lectures: Units – 6,7,8&9 of
‘Working Capital Management’.
Receivable Description:
Management at 1. Management of Accounts Receivables – I
Chapter
Anthony Fast 2. Management of Accounts Receivables – II
16
Food Ltd. (IBS 3. Management of Accounts Receivables – III
CRC case) 4. Limitations of Credit Time Period
5. Goals and Functions of Accounts Receivables
Management
6. Credit Policy Variables
Sessions 12 to 19
 IBS Hyderabad (Academic Year – 2023-24)
https://nptel.ac.in/courses/110/107/110107073/
NPTEL Videos Lectures: Units – 7,8&10 of
‘Financial Statement Analysis and Reporting’.
Description:
Financial Statements – Need
Comprehend and assess the 1. Ratio Analysis Part-I
Financial and Importance, Common
firms’ financial performance 2. Ratio Analysis Part-II
23-26 Statement Size Analysis, Comparative Chapter 3
using various tools and 3. Ratio Analysis Part-III
Analysis Analysis, Trend Analysis,
techniques. 4. Different Sets of Ratios Part-I
Ratio Analysis
5. Different Sets of Ratios Part-II
6. Dupont Ratios Part-I
7. Dupont Ratios Part-II
8. Valuation of Capital Market Ratios Part-I
Realize the importance of
dividend policy and its impact Is a Share https://nptel.ac.in/courses/110/107/110107144/
Dividend Policies; Dividend
on firm value. Buyback Right NPTEL Videos Lectures: Unit-12of ‘Financial
Dividend Theories - Traditional,
Understand the logic of for Your Chapter Management for Managers’.
27-29 Policies & Walter, Gordon and MM
dividend irrelevance. Company? 14 Description:
Theories theories, Share repurchase,
Enumerate the market (HBS Case ID: 1. Dividend Decisions – Part I
Bonus issue, Stock split
imperfections that make R0104K) 2. Dividend Decisions – Part II
dividend policy irrelevant.
https://nptel.ac.in/courses/110/107/110107093/
NPTEL Videos Lectures: Units – 10&11 of
‘Working Capital Management’.
Description:
1. Cash Management
Identify the motives and needs 2. Models of Cash Management
for holding cash. 3. Certainty Model by Baumol
Understand the techniques for 4. Uncertainty Model by Miller & Orr
Cash Cash management, Cash Chapter
30-31 preparing cash budget. 5. Cash Management Techniques
Management Budget and playing the float 16
Enumerate the factors that https://nptel.ac.in/courses/110/107/110107127/
determine the required cash NPTEL Videos Lectures: Unit-4 of ‘Management
balances. Accounting’.
Description:
1. Cash Budget – I
2. Cash Budget – II
3. Cash Budget – III
4. Cash Budget – IV

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 IBS Hyderabad (Academic Year – 2023-24)
https://nptel.ac.in/courses/110/107/110107093/
NPTEL Videos Lectures: Units – 11&12 of
‘Working Capital Management’.
Assess the benefits and costs
Behavior of current assets and Pacific Grove Description:
Financing of trade credit.
pattern of financing current Spice Company Chapter 1. Management of Current Liabilities
32 Current Understand the norms used by
assets, current asset financing (HBS Case ID: 16 2. Management of Accounts Payable
Assets banks in financing a firm's
instruments 4366) 3. Other Accruals and Overtrading
working capital needs.
4. Bank Finance – Introduction
5. Recommendations of Tandon and Chore
Committees
Using company’s data from PROWESS database, each group
(5-6 students) is required to present on various financial ratios. Show the student how to:
Parameters for evaluation: • Access and collect the data from databases like Prowess and Capitaline Plus.
33 Project Work
Financial Statement Analysis, Comparison of ratios with • Perform calculations in excel, report writing and presentation using power
industry standard and with its competitor’s ratios along with point.
interpretation and suggestions.

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
Test I 1 11th session 13th session 15
Test II 2 21st session 23rd session 15
Project report 3 31-33 session 33rd session 20
rd
Class Participation 4 33 session 33rd session 10
End exam At the end of Exams dept shall plan and 40
the semester communicate
Total 100

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