Strategic Financial Management
Subject Overview
Strategic Financial Management exposes students to strategic applications of finance — corporate risk management and financial planning models, corporate valuation approaches (MVA, EVA, DCF) and long-term project evaluation, capital structure theories (Net Income, MM, Miller) and dividend policy, and working capital management and corporate restructuring. A 4-credit core theory paper.
Unit-wise Syllabus
4 units — click WhatsApp below to get the full notes for each
Unit 1: Strategic finance and risk management
Meaning, nature and scope of SFM, financial and non-financial objectives, agency theory, strategic decision-making framework, shareholder value creation and value drivers, corporate risk management using forwards/futures/options/swaps, financial planning models and Higgins' sustainable growth model
Unit 2: Corporate valuation
Models and approaches to corporate valuation — Marakon, Alcar, McKinsey and DCF (FCFE/FCFF) approaches, MVA and EVA approaches, shareholder value creation implications, valuation of long-term investment decisions, sensitivity analysis, risk-adjusted discount rates, modified IRR and real options
Unit 3: Capital structure and dividend policy
Business and financial risk, determinants of capital structure, EBIT/EPS and ROI/ROE analysis, capital structure theories (Net Income, Net Operating Income, Traditional, Modigliani-Miller, Miller Model), financial distress and agency cost, dividend policy decisions, payout ratio, share buybacks, bonus issues and stock splits
Unit 4: Working capital and corporate restructuring
Meaning and concepts of working capital, operating cycle, permanent and temporary working capital, approaches and sources of financing, role of factoring and securitization, financial distress, methods of corporate restructuring, government policies for reviving sick units