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RK COLLEGE OF ENGINEERING

DEPARTMENT OF BUSINESS ADMINISTRATION


MANGERIAL ECONOMICS AND FINANCIAL ACCOUNTUNG – ECE – II / I
COURSE HANDOUT
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Subject Title : MANGERIAL ECONOMICS AND FINANCIAL ACCOUNTUNG


Subject Code :
Periods/Week : 07
Name Of The Faculty : Dr. B.VAMSI KRISHNA

SCOPE AND OBJECTIVES:


 The Learner is equipped with the knowledge of estimating the Demand and demand
 The knowledge of understanding of the Input-Output-Cost relationships
 Estimation of the least cost combination of inputs.
 To understand the nature of markets, Methods of Pricing in the different market
structures
 To learn different Accounting Systems, preparation of Financial Statement
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
Course Objectives:
 The Learning objectives of this paper is to understand the concept and nature of Managerial
Economics and its relationship with other disciplines and also to understand the Concept of
Demand and Demand forecasting, Production function, Input Output relationship, Cost-
Output relationship and Cost-Volume-Profit Analysis.
 To understand the nature of markets, Methods of Pricing in the different market structures
and to know the different forms of Business organization and the concept of Business Cycles.
 To learn different Accounting Systems, preparation of Financial Statement and uses of
different tools for performance evaluation. Finally, it is also to understand the concept of
Capital, Capital Budgeting and the techniques used to evaluate Capital Budgeting proposals.
Unit-I
Introduction to Managerial Economics and demand Analysis:
Definition of Managerial Economics –Scope of Managerial Economics and its relationship
with other subjects –Concept of Demand, Types of Demand, Determinants of Demand-
Demand schedule, Demand curve, Law of Demand and its limitations- Elasticity of Demand,
Types of Elasticity of Demand and Measurement- Demand forecasting and Methods of
forecasting.
Unit – II:
Production and Cost Analyses:
Concept of Production function- Cobb-Douglas Production function- Leontief production
function - Law of Variable proportions-Isoquants and Isocosts and choice of least cost factor
combination-Concepts of Returns to scale and Economies of scale-Different cost concepts:
opportunity costs, explicit and implicit costs- Fixed costs, Variable Costs and Total costs –
Cost –Volume-Profit analysis-Determination of Breakeven point(simple problems)-
Managerial significance and limitations of Breakeven point.
Unit – III:
Introduction to Markets, Theories of the Firm & Pricing Policies:
Market Structures: Perfect Competition, Monopoly, Monopolistic competition and
Oligopoly
– Features – Price and Output Determination – Managerial Theories of firm: Marris and
Williamson’s models – other Methods of Pricing: Average cost pricing, Limit Pricing,
Market Skimming Pricing, Internet Pricing: (Flat Rate Pricing, Usage sensitive pricing) and
Priority Pricing.
Unit – IV:
Types of Business Organization and Business Cycles:
Features and Evaluation of Sole Trader, Partnership, Joint Stock Company – State/Public
Enterprises and their forms – Business Cycles : Meaning and Features – Phases of a Business
Cycle.
Unit – V:
Introduction to Accounting & Financing Analysis:
Introduction to Double Entry Systems – Preparation of Financial Statements-Analysis and
Interpretation of Financial Statements-Ratio Analysis – Preparation of Funds flow and cash
flow statements (Simple Problems)
Unit – VI:
Capital and Capital Budgeting: Capital Budgeting: Meaning of Capital-Capitalization-
Meaning of Capital Budgeting-Time value of money- Methods of appraising Project
profitability: Traditional Methods(pay back period, accounting rate of return) and modern
methods(Discounted cash flow method, Net Present Value method, Internal Rate of Return
Method and Profitability Index)
TEXT BOOKS
1. Dr. N. AppaRao, Dr. P. Vijay Kumar: ‘Managerial Economics and Financial Analysis’,
Cengage Publications, New Delhi – 2011
2. Dr. A. R. Aryasri – Managerial Economics and Financial Analysis, TMH 2011
3. Prof. J.V.Prabhakararao, Prof. P. Venkatarao. ‘Managerial Economics and Financial
Analysis’, Ravindra Publication.
COURSE PLAN

Lect.No. Date Learning Topics to be covered CHAPTERS IN THE


Objectives
(Student learns REFERENCE BOOK
about)
1 Unit-I
Introduction to Prof.J.V.Prabhakara Rao
Managerial Economics and Prof.P.Venkata Rao
demand Analysis
2 Definition of ME Definition and Scope of Prof.J.V.Prabhakara Rao
Managerial Economics Prof.P.Venkata Rao
3 Relationship with Managerial Economics Prof.J.V.Prabhakara Rao
Others relationship with other Prof.P.Venkata Rao
subjects
4 Demand Demand Prof.J.V.Prabhakara Rao
Types of Demand Prof.P.Venkata Rao
5 Factors of Demand  Determinants of Prof.J.V.Prabhakara Rao
Demand Prof.P.Venkata Rao
 Demand schedule
 Demand curve
6 Limitations of Law of Demand and its Prof.J.V.Prabhakara Rao
Demand limitations Prof.P.Venkata Rao
7 Types of Elasticity Elasticity of Demand Prof.J.V.Prabhakara Rao
of Demand  Types of Elasticity of Prof.P.Venkata Rao
Demand and Measurement
8 Forecasting of Demand forecasting Prof.J.V.Prabhakara Rao
Demand Prof.P.Venkata Rao
9 Methods and  Methods of forecasting Prof.J.V.Prabhakara Rao
Concepts Prof.P.Venkata Rao
10 Important Revision
Questions
11 Unit – II: Prof.J.V.Prabhakara Rao
Production and Cost Prof.P.Venkata Rao
Analyses
12 Production Concept of Production Prof.J.V.Prabhakara Rao
Functions function Prof.P.Venkata Rao
13 Type of Production Cobb-Douglas Production Prof.J.V.Prabhakara Rao
Function function Prof.P.Venkata Rao
14 Type of Production Leontief production function Prof.J.V.Prabhakara Rao
Function Prof.P.Venkata Rao
15 Law of Variable Law of Variable Prof.J.V.Prabhakara Rao
Proportions proportions Prof.P.Venkata Rao
 Isoquants
 Isocosts
 choice of least cost factor
combination
16 Concept of Retuen Concepts of Returns to scale Prof.J.V.Prabhakara Rao
to Scale and Prof.P.Venkata Rao
17 Concept of Retuen Economies of scale Prof.J.V.Prabhakara Rao
to Scale Prof.P.Venkata Rao
18 Concept of Cost Different cost concepts: Prof.J.V.Prabhakara Rao
 opportunity costs Prof.P.Venkata Rao
 explicit and implicit
costs-
19  Fixed costs, Variable Prof.J.V.Prabhakara Rao
Costs Prof.P.Venkata Rao
 Total costs – Cost
20 Volume-Profit analysis Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
21 BEP Determination of Breakeven Prof.J.V.Prabhakara Rao
point(simple problems) Prof.P.Venkata Rao
22 Managerial significance and Prof.J.V.Prabhakara Rao
limitations of Breakeven Prof.P.Venkata Rao
point.
23 Important Revision
Questions
24 Unit – III: Prof.J.V.Prabhakara Rao
Introduction to Markets, Prof.P.Venkata Rao
Theories of the Firm &
Pricing Policies
25 Introduction to Markets Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
26 Market Structures Market Structures Prof.J.V.Prabhakara Rao
 Perfect Competition, Prof.P.Venkata Rao
 Monopoly
27 Market Structures  Monopolistic Prof.J.V.Prabhakara Rao
competition Prof.P.Venkata Rao
 Oligopoly
28 Features of Markets Prof.J.V.Prabhakara Rao
Structures Prof.P.Venkata Rao
29 Price and Output Prof.J.V.Prabhakara Rao
Determination Prof.P.Venkata Rao
30 Managerial Theories Managerial Theories of Prof.J.V.Prabhakara Rao
of firm firm Prof.P.Venkata Rao
 Marris and Williamson’s
models
31 Different Types in Methods of Pricing Prof.J.V.Prabhakara Rao
Pricing Internet Pricing Prof.P.Venkata Rao
 Flat Rate Pricing
 Usage sensitive pricing
 Priority
Pricing.
32 Different Types in Methods of Pricing Prof.J.V.Prabhakara Rao
Pricing  Averagecost pricing Prof.P.Venkata Rao
 Limit Pricing,
 Market Skimming
Pricing,
33 Important Revision
Questions
34 Unit – IV: Prof.J.V.Prabhakara Rao
Types of Business Prof.P.Venkata Rao
Organization
and Business Cycles
35 Sole Trader Features of Sole Trader Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
36 Evaluation of Sole Trader Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
37 Partnership Partnership Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
38 Joint Stock Joint Stock Company Prof.J.V.Prabhakara Rao
Company  State/Public Enterprises Prof.P.Venkata Rao
and their forms
39 Business Cycles Business Cycles Prof.J.V.Prabhakara Rao
 Meaning and Features Prof.P.Venkata Rao
40 Phases of a Business Phases of a Business Cycle Prof.J.V.Prabhakara Rao
Cycle Prof.P.Venkata Rao
41 Important Revision
Questions
42 Unit – V: Prof.J.V.Prabhakara Rao
Introduction to Accounting Prof.P.Venkata Rao
& Financing Analysis
43 Double Entry Introduction to Double Entry Prof.J.V.Prabhakara Rao
Systems Systems Prof.P.Venkata Rao
44 Financia Statements Preparation of Financial Prof.J.V.Prabhakara Rao
Statements Prof.P.Venkata Rao
45 Analysis and Interpretation Prof.J.V.Prabhakara Rao
of Financial Statements Prof.P.Venkata Rao
46 Ratio Analysis Ratio Analysis Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
47 Funds Flow Preparation of Funds flow Prof.J.V.Prabhakara Rao
(Simple Problems) Prof.P.Venkata Rao
48 Cash Flow Preparation of cash flow Prof.J.V.Prabhakara Rao
statements (Simple Problems) Prof.P.Venkata Rao

49 Important Revision
Questions
50 Capital Budgeting Unit – VI: Prof.J.V.Prabhakara Rao
Capital and Capital Prof.P.Venkata Rao
Budgeting
51 Meaning & Capital Budgeting Prof.J.V.Prabhakara Rao
Definition  Meaning of Capital Prof.P.Venkata Rao
 Capitalization
52 Meaning of Capital Prof.J.V.Prabhakara Rao
Budgeting Prof.P.Venkata Rao
53 Time value of money Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
54 Methods Methods of appraising Prof.J.V.Prabhakara Rao
Project profitability Prof.P.Venkata Rao
 Traditional Methods
 modern methods
55 Traditional Methods Traditional Methods Prof.J.V.Prabhakara Rao
 pay back period Prof.P.Venkata Rao
 Accounting rate of return
56 Modern Methods Modern methods Prof.J.V.Prabhakara Rao
 Discounted cash flow Prof.P.Venkata Rao
Method
57 NPV Net Present Value Method Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
58 IRR Internal Rate of Return Prof.J.V.Prabhakara Rao
Method Prof.P.Venkata Rao
59 PI Profitability Prof.J.V.Prabhakara Rao
Index Prof.P.Venkata Rao
60 Important Revision
Questions
SELF STUDY TOPICS
UNITS TOPICS SOURCE
I Introduction to Managerial Economics and demand Prof.J.V.Prabhakara Rao
Analysis Prof.P.Venkata Rao
II Production and Cost Analyses Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
III Introduction to Markets, Theories of the Firm & Prof.J.V.Prabhakara Rao
Pricing Policies Prof.P.Venkata Rao
IV Types of Business Organization and Business Prof.J.V.Prabhakara Rao
Cycles Prof.P.Venkata Rao
V Introduction to Accounting & Financing Analysis Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
VI Capital and Capital Budgeting Prof.J.V.Prabhakara Rao
Prof.P.Venkata Rao
Evaluation pattern:
Internal marks : 30
External marks : 70
EVALUATION SCHEME:
COMPONENT DURATION(MINUTES) MARKS DATE AND TIME
MID - 1 90 15
MID - 2 90 15
Theory 180 70

Chamber consultation Hour:


Department of master of Business Administration:
Room No :
Contact hours: 9:30 a.m to 4:40 p.m
E-mail Id: vamsibu@gmail.com
Notices:
All notices regarding this subject will be displayed in the class room notice board.

Signature of Faculty

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