Financial Management
Subject Overview
Financial Management is the core paper on corporate finance decisions — raising capital, deciding what to invest in, and setting dividend policy. You'll cover financial management's goals and the time value of money, cost of capital and capital structure theories with leverage analysis, capital budgeting techniques (payback, ARR, NPV, IRR), and close with working capital management and dividend policy theories. This is a 6-credit core paper across 4 units, and it's the foundation for the Finance specialisation electives — Corporate Accounting, Financial Markets & Services — in Semesters 5 and 6.
Unit-wise Syllabus
4 units — click WhatsApp below to get the full notes for each
Unit 1: Introduction to financial management
Meaning, nature and scope of financial management, profit maximisation vs. wealth maximisation, finance functions — investment, financing, liquidity and dividend decisions, sources of long-term and short-term finance, time value of money
Unit 2: Cost of capital & capital structure
Meaning and significance of cost of capital, cost of equity, preference shares and debt, weighted average cost of capital, capital structure theories — NI approach, NOI approach, MM approach, traditional approach, financial and operating leverage
Unit 3: Investment decision-making
Meaning, importance and nature of investment decisions, investment evaluation criteria, non-discounted cash flow methods (payback, post-payback, ARR), discounted cash flow techniques — NPV, IRR, profitability index
Unit 4: Working capital & dividend policy
Meaning, significance, types and approaches to working capital, factors affecting working capital management, issues in dividend decisions, forms of dividend, theories of relevance and irrelevance of dividends