Financial Management
Subject Overview
Financial Management is the core paper on how businesses make money decisions — raising capital, deciding what to invest in, and managing working capital day to day. You'll cover the time value of money and cost of capital, capital structure theories and operating/financial leverage, capital budgeting techniques (NPV, IRR, payback period) alongside dividend policy models (Walter, Gordon, MM), and close with working capital management — cash, receivables, and inventory. This is a 6-credit core paper across 4 units, and it's the essential foundation for Goods and Services Tax and the Advanced Financial Management elective in the same and later semesters.
Unit-wise Syllabus
4 units — click WhatsApp below to get the full notes for each
Unit 1: Introduction to financial management & cost of capital
Meaning, scope and objectives of financial management, functions and role of a financial manager, time value of money — compounding and discounting techniques, meaning and determination of cost of capital
Unit 2: Capital structure & leverage
Meaning and features of capital structure decisions, factors affecting capital structure, theories of capital structure, EBIT-EPS analysis, financial and operating leverage
Unit 3: Capital budgeting & dividend decisions
Meaning and process of capital budgeting, discounted and non-discounted evaluation methods (payback period, ARR, NPV, benefit-cost ratio, IRR), capital rationing, determinants and types of dividend policy, Walter's Model, Gordon's Model, MM Hypothesis
Unit 4: Working capital management
Planning and forecasting working capital, importance of adequate working capital, determinants of working capital requirement, sources of working capital, cash management, receivables management, inventory management