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Corporate Finance
Corporate Finance Elective PGDM Date of Current Version : May 2010 3 Credit MANAC 10% Attendance 10% Class Participation 10% Case Presentations 70% Final Examination Dilip Thosar Trimester 4 FSB 2009-2011 Trimester 1 FSLE 2007-2011 To understand the concepts and techniques of Financial Analysis and Decision Making especially in Corporate context At the completion of the subject the student should have understood: basic concepts of financial value, asset ownership and trade the meaning of the goal of the finance function viz. Maximization of the Shareholders wealth. the importance of Cash flows Return on Investment and Discounted Cash Flow Analysis fundamentals of and techniques for the four Financial Decisions o Capital Structure and Sourcing, o Capital Expenditure o Dividend Policy o Working Capital management the concept of financial risk, its relation with expected returns and techniques of analyzing these risks the environment in which companies carry out these decisions, especially the various capital asset markets and Banks Outcomes Understand basic concepts of finance: eg. valuation of assets, time value of money, risk management, etc. Gain an understanding of the tools and techniques required for analysis in the scope of finance functions. Enhance professional competence by adequate application of the concepts and techniques learnt in solving problems and cases in real-life financial market environment % of contribution 30%

1. Title of subject 2. Subject code 3. Status of subject 4. Stage 5. Version 6. Credit 7. Pre-Requisite 8. Assessment

9. Teaching staff 10. Trimester 11. Aims of subject 12. Learning Outcomes

40%

30%

13. Details of subject 1.

Contents Introduction

Sessions 4

Introduction to Finance, Financial value of assets, Concept of Capital in Business. Types of Firms, Stakeholders of a corporate entity, Goal of the Finance Manager, The Four Finance Functions 2. Capital Acquisition Types of Sources of Finance, Capital Structure, Cost of Capital, Tax shield, Weighted Average Cost of Capital, The Capital Asset Pricing Model, Modigliani and Miller proposition on Optimal Capital Structure, Choice of method to raise capital 3. Capital Expenditure Time Value of Money, Capital Expenditure Decision, Return on Investment and RoI indices, Discounted Cash Flow, Net Present Value, Internal Rate of Return, Payback Period, Profitability Index 4. Dividend Policy Determining payout policy, Dividend other than by cash: Bonus shares, Stock Split, Rights issue, Modigliani and Miller proposition on dividend 5. Working Capital Management. Components of Working Capital, Operating Cycle and Cash Conversion Cycle, Estimating requirement of working capital, Management of selected current assets (Receivables and Inventory), Credit Policy 6. Risk Management in Finance Risk probability and quantum, Decision Trees, Sensitivity Analysis, Scenario Analysis, Monte Carlo method, Financial and Operating Leverage, Risk v/s Return, The Capital Asset Pricing Model 7. Overview of other topics Corporate Governance, Ethics, Mergers and Acquisitions, Derivatives, Foreign Exchange markets, Hedging Total 14. Text Books / References 15. Session Plan
# 1 Date From To Topic Introduction Description Introduction to Finance, Financial value of assets

30

ISBN 81-259-1658-X Financial Management. Author: I M Pandey. Publisher: Vikas Publishing House (Ninth Edition or later) ISBN 0-07-061055-X International Financial Management Author: P.G.Apte Publisher: Tata McGraw Hill (Fourth Edition or later) www.moneycontrol.com, www.investopedia.com

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Introduction Introduction Introduction Capital Acquisition Capital Acquisition Capital Acquisition Capital Acquisition Capital Acquisition Capital Expenditure Capital Expenditure Capital Expenditure Capital Expenditure Capital Expenditure Capital Expenditure Dividend Policy Dividend Policy Working Capital Management Working Capital Management Risk Management in Finance Risk Management in Finance Risk Management in Finance Risk Management in Finance Risk Management in Finance Overview of other topics Overview of other topics

Types of Firms, Concept of Capital in Business, Return on Investment, Risk Management Stakeholders of a corporate entity, Goal of the Finance Manager, The Four Finance Functions, Work in the Finance Cases and Presentations Types of Sources of Finance, Capital Structure, Tax shield Cost of Capital, Weighted Average Cost of Capital, The Capital Asset Pricing Model Modigliani and Miller proposition on Optimal Capital Structure, Choice of method to raise capital Numericals and Cases Numericals and Cases Time Value of Money Capital Expenditure Decision, Return on Investment and RoI indices Discounted Cash Flow, Net Present Value Internal Rate of Return, Payback Period, Profitability Index Numericals and Cases Numericals and Cases Determining payout policy, Taxation for Company and shareholder, Dividend other than by cash: Bonus shares, Stock Split, Rights issue, Impact on Balance Sheet, Impact on Shareholder, Modigliani and Miller proposition on dividend irrelevance Valuation of Shares and Bonds, Numericals and Cases Components of Working Capital, Operating Cycle and Cash Conversion Cycle, Estimating requirement of working capital, Management of selected current assets (Receivables and Inventory), Credit Policy Numericals and Cases Risk probability and quantum, Decision Trees Sensitivity Analysis, Scenario Analysis Monte Carlo method, Financial and Operating Leverage, Risk v/s Return, The Capital Asset Pricing Model Numericals and Cases Numericals and Cases Corporate Governance, Ethics Derivatives

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Overview of other topics Overview of other topics Presentations Presentations

Foreign Exchange markets, Hedging Mergers and Acquisitions Presentations Presentations