GC UNIVERSITY, FAISALABAD

FACULTY OF ECONOMICS & MANAGEMENT SCIENCES

LYALLPUR BUSINESS SCHOOL

Course Specifications

Financial Management

Spring – 2023
http://www.gcuf.edu.pk/
 COURSE SPECIFICATIONS
Basic Information
Course Title: Financial Management
Course Code: FIN-405
Course credits/week: Theory: 03 Lab: Nil Total: 03
Pre-requisite(s): Business Finance, Introduction to Statistics,
Financial Accounting
Co-requisite(s):
Program(s) on which the course is given: BBA 4th Semester
Is the course major or minor element of the program: Major: Minor:
Department offering the program: Lyallpur Business School
Department offering the course: LBS (Finance)
Academic year/level: 2
Revision #:
Last revised on (date): SPRING 2023

Overall Aims of the Course

Course Description:

The module aims at building competence in corporate finance further by extending the coverage
in Business Finance module to include three more of the finance functions – financial planning
and control, working capital management and financing sources. It continues to emphasize
strategic decision-making techniques that best serve the interests of shareholders, which is to
maximize the value of the company.

Course Objectives:

The course aims to offer students a unique case setting to understand how concepts
and theories of corporate finance are applied in the real world and generate a
lasting impact on firm value.

Learning Outcomes:

At the end of this course the student will be able to understand:

1. Role of financial planning and control– financial forecasting and cash budgeting tools – in
planning for the firm’s short term financial requirements
2. Working capital and its components, applications of different techniques that managers can
use to manage various aspects of working capital – cash and liquidity, credit and receivables,
inventories, etc.
3. Short term sources of financing
4. Long term financing –venture capital, equity, debentures etc.
5. Different theories of capital structure, their predictions about the optimal capital structure and
the limitations of using debt in the firms‟ capital structure.

Class Format:

Financial Management is a concept based and practical course, thus most of our classes
will be focused on discussion of topics and related case studies.

Our weekly class Instructions and discussions will follow this format:

Weekly Course Objectives

Week Module In This Chapter, We Will Address the Following
Questions.

Chapter – 1:  A strategic financial decision framework

The Role of Financial  Functions of Financial Management
Management
 Strategies at different Hierarchy level
1&2 TEXT BOOK (Van
Horne, Fundamentals  Financial Planning
of Financial  Agency Problem
Management)

“Share and Their Valuation’’

Chapter – 4:  DistinctionsAmongValuation Concepts
Valuation of Long-
 PreferredStockValuation
Term Securities
TEXT BOOK (Van  CommonStockValuation
3, 4 & 5  Dividend Discount Models Valuation
Horne, Fundamentals
of Financial  One and Multiple Year Holdings of share
Management & DDM  Application of DDM
Notes)  Practice and Problems

6, 7 & 8 Chapter 8  Working Capital Management

Working Capital
 Management  The Cash Conversion cycle
 Managing Cash & Marketable
TEXT BOOK (Van  Receivable Management
Horne, Fundamentals  Inventory Management
of Financial  Practice and Problems
Management)

 “Capital Budgeting”
 Distinguish between cash flows and accounting
profits;
Chapter – 12:  Define the following terms and discuss their
Capital Budgeting relevance to capital budgeting: incremental cash
and Estimating Cash flow, sunk cost, opportunity cost
Flows  Define an expansion project and a replacement
9 & 10 TEXT BOOK (Van project;
Horne, Fundamentals  Define initial investment outlay, operating cash
of Financial flow over a project’s life, and terminal-year cash
Management) flow, and compute each measure for an expansion
project and a replacement project;
 Discuss the effects of inflation on capital budgeting
analysis.
 Techniques of Capital Budgeting”
 NPV
 IRR
 Payback period
 Accounting rate of return
 Discounted payback period
Discounted NPV
“Capital Budgeting”
 Calculate four methods used to evaluate capital
Chapter – 13:
projects: payback period, discounted payback
Capital Budgeting
period, net present value (NPV), and internal rate of
Techniques
11 & 12 return (IRR);
TEXT BOOK (Van
 Explain the NPV profile;
Horne, Fundamentals
 Explain the relative advantages and disadvantages
of Financial
of the NPV and IRR methods, particularly with
Management)
respect to independent versus mutually exclusive
projects;
 Describe and calculate the modified IRR (MIRR);
 Explain the “multiple IRR problems” and the
condition that can cause the problem;
 Explain why NPV, IRR, and MIRR methods can
produce conflicting rankings for capital projects.

13 & 14 Chapter – 15: “The Cost of Capital”

  Explain why the cost of capital used in capital
budgeting should be a weighted average of the costs
of various types of capital the company uses and not
Required Returns the cost of the specific financing used to fund a
and the Cost of project;
Capital  Define and calculate (1) the component cost of debt,
TEXT BOOK (Van (2) the component cost of preferred stock, (3) the
Horne, Fundamentals component cost of retained earnings (three different
of Financial methods), and (4) the component cost of newly
Management & CFA issued stock or external equity;
NOTES)  Define the target (optimal) capital structure;
 Define and calculate a company’s weighted-average
cost of capital (WACC).

Chapter – 16:  Capital structure & theories

Operating &  MM theory, Pecking order and Trade off theory
Financial Leverage  Leverage Theory and Analysis.
 Operating leverage
TEXT BOOK (Van  Financial leverage
15 & 16 Horne, Fundamentals  Total leverage
of Financial  Cash flow ability to service debt
Management & CFA
NOTES)

Required Learning Resources

Text Book(s): Fundamentals of Financial Management by James C. Van
(Title, Author, Edition, Horne, 13th Edition
Publisher)
Reference Book(s): Principles of Managerial Finance by Lawrence J. Gitman,
(Title, Author, Edition, 13th Edition
Publisher) Fundamentals of Financial Management by Eugene F.
Brigham and Joel F. Houston,10th Edition
Facilities Required for Teaching and Learning
-White Board
-Multimedia

Assignments Schedule & Quiz

No. Week Assigned Week Due QUIZ TESTS
Two quiz tests will be conducted during
1 5 6 the semester. There will be no makeup
of these tests.
2 13 14

Examination / Weighting of Assessments & Quizzes

Quizzes + Assignments + Class Participation + Projects 20 %
 Mid-semester examination 30 %
End-semester examination 50 %

Dress Code:
Formal business attire only (Dress Trouser, Shirt, Tie, Dress Shoes) Jeans and
Joggers NOT ALLOWED.
Not sure what this dress code means? Read When Job-Hunting: Dress for
Success.

Instructor Responsibilities:
In keeping with the format of this class, I see myself as your immediate
supervisor. In that sense, I plan to mentor each of you so that you learn how to
make the best decisions possible, to understand and apply key marketing
concepts, and to prepare you to become productive employees upon graduation.
I will do my best to help each of you grow into the best marketer you choose to
become. Thus, besides class time -- where I will often put you on the spot -- I
expect there will be many times we will communicate outside of class, and I will
do my best to help you in a timely fashion.

Student Responsibilities:
You are expected to arrive to class on time, professionally dressed, and
prepared for the day. You should be fully prepared to discuss and debate the
course material assigned for that date. You are expected to participate at all
levels and offer objective praise and criticism of your classmates’ analyses and
conclusions. This course is not for the meek or timid. You must contribute to the
greater understanding of marketing and marketing management. This course is a
combination of doing (homework), thinking, and discussing.

Class Participation and Individual Conduct

You should make every effort to attend each class meeting. In addition, it is
important that you prepare for each class by reading the relevant book chapters
before the class session in which it will be discussed. You will also be expected to
participate in class discussion and complete in‐class exercises that will be based
on these reading assignments. Your participation grade will be based on
contribution and attendances (be punctual, attend classes, come prepared by
doing the readings, show initiative in the discussion). Note that students who
only “show up” should not expect even an average score. You must be present in
class in order to receive credit for in‐class exercises, quizzes, participation, etc.
Eating, sleeping, reading, texting, listening to or working on unrelated materials,
sidebar conversations, or “multi‐tasking” using a computer or other electronic
device is not permitted. Laptops (and similar devices) may be used in class for
course related activities such as taking notes. Students may bring drinks such as
water.

General Expectations & Classroom Etiquettes.

In terms of performance in this class, I have very high expectations and

anticipate outstanding work from each of you. I hope for a very positive
experience for us all. Keep in mind that if you do not deliver outstanding work
then you will be graded to reflect this. I ask that you contact me directly and
immediately if you ever have any questions or concerns regarding the class, any
particular assignments, or your grade(s). I am always willing to help.
I do ask that all students be respectful and courteous to other class members as
well as the professor. This includes turning off cell phones and other electronic
devices before class begins and arriving to class on time, as walking in late is
disruptive to other classmates and the professor. Those who walk in late will
likely not receive attendance credit for that day.

Useful Tools / Advice:

This course is time and labor intensive. Be certain to schedule enough time in
your weekly planning to accommodate.
You need to have good access to the Web and an e-mail account.

Please always do your best work.

Etc.:
It is expected that all work you submit for a grade in this class be original and
prepared for this class only.

I am always willing to see my students and will go out of my way to schedule

meetings. Please make sure that if you make an appointment that you keep it.
Finally, as will quickly become apparent, e-mail is by far the easiest and most
reliable method to reach me.