Managerial Finance

Course: B.
Com Semester: V
No. of Hours: 45 Credits: 3
Subject: MANAGERIAL FINANCE
Course Objectives:
Explain the concept of managerial finance its relevance and importance , Recognize and
distinguish capital structure theories along with its importance. Discuss the dividend decisions
and its determinants along with approaches. Examine the need and estimation of working
capital in a firm. Articulate the process of valuation of firms and entities including start-ups
and various methods used .
Module - 1 8 Hours
Time value of money, Capital budgeting process
Introduction to Cash flows, Cash Flows Vs Profit, Structure of Cash flows, Components of
Cash flows Initial Investment, Annual net cash flows, Terminal Cash flows, various methods
of evaluation of investments -NPV- IRR-PI-DCF -ARR-Payback
Risk Analysis in capital budgeting- Sensitivity analysis. Statistical techniques, Probability-
Standard deviation, Coefficient of variation, Decision Tree Analysis (problems).
Module – 2 10 Hours
Capital Structure
Introduction, Meaning and Concept of Capital Structure, Importance, Factors Determining
Capital Structure, Capital Structure Theories, Assumptions, Relevance of Capital Structure:
NI Approach, Traditional Approach, Irrelevance of Capital Structure: The NOI Approach,
Irrelevance of Capital Structure: MM Hypothesis with and Without Taxes– The Arbitrage
Process. (Problems), Irrelevance of Capital Structure: MM Hypothesis with Taxes (Problems).
Module - 3 8 Hours
Dividend Decisions and Financing of the Firm
Dividend Decisions, Meaning, Determinants, Types and Forms, Concept and Significance,
Relevance Theories- Walter’s Model, Gordon’s Model, Dividend& Uncertainty: The Bird in
the Hand Approach, Irrelevance of Dividend Policy- MM Theory, (Problems on Dividends
and Value of Firm)- Capital sources – Equity- Debt -Preference share capital -Debentures –
Convertible instruments -Short term and long term finance.
Module - 4 8 Hours
Working Capital Estimation and Calculation
Introduction – Basics, Operating Cycle (problems included), Types of Working Capital Needs,
Financing of Current Assets: Hedging: Conservative, Aggressive, WC Monitoring and
Control, Working Capital Estimation Statement (problems included).
Cash Management: Meaning, Motives, Objectives, Planning and Controlling Aspects, Models
of Cash Management.
Inventory Management: Introduction, Meaning, Benefit and Types
Receivables Management: Meaning, Costs of Receivables, Benefits, Receivables Management
Process.
Module - 5 11 Hours
Business valuation, approaches to start-up valuation
Introduction – Business valuation , relevance, importance, purpose, stakeholders, assumptions,
the why and what of business valuation
Methods and approaches -Net-assets method, Fair value method, DCF method, Relative
valuation, Market multiples valuation,– assumptions, limitations and appropriateness of each
in relation to the respective targets and industry, CAPM- its relevance and importance in
determination of hurdle rate of firm- Overview of portfolio management and its importance in
context of projects and investments .importance of appreciating the trade off between risk and
return.
Start-up valuation and the assumptions, challenges, issues and approaches used- fund raising
approach followed by start-ups- various methods of start up valuation – brief overview – Berk
us method of start-up valuation , Venture capital method, score card method, Risk
factor .summation method. –Risks arising in business - How risks are managed using
derivatives and list of instruments used for purposes.
Reference Books :
1. S N Maheshwari, Financial Management.

2. Khan and Jain, Financial Management.
3. Sharma and Sashi K. Gupta, Advanced Financial Management.
4. I M Pandey, Financial Management.
5. James C Vanhorne, Financial Management.
6. Prasanna Chandra, Financial Management.
7. Financial Management, Ashwasth Damodaran
8. Damodaran, A, Wiley finance edition, Security Analysis for Investments and
Corporate finance
9. Damodaran, A Wiley finance Dark side of Valuation :Valuing , young , distressed and
complex businesses –
10. Jayant R.Varma , Mcgrawhill publications (latest edition)
Derivatives and Risk management
Course Outcomes:
CO NO COURSE OUTCOME BTL
1 Develop the knowledge of the learners in the role and

application of concepts involved in managerial finance in an
organization
2 Cultivate the knowledge of capital structure theories and its

implications in firm valuation.
3 Demonstrate how dividend policies impact the firm valuation.
4 Describe the need for working capital policy in firm

performance.
5 Define the key elements involved in business valuation and the

various methods adopted in the process

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Course: B.

1. S N Maheshwari, Financial Management.

CO NO COURSE OUTCOME BTL

1 Develop the knowledge of the learners in the role and

2 Cultivate the knowledge of capital structure theories and its

4 Describe the need for working capital policy in firm

5 Define the key elements involved in business valuation and the

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