Indian Institute of Management Kozhikode

Executive Management Education Programmes eMep 10/ePGP 03

Financial Management -II

Instructor: Abhilash S. Nair Telephone: (0495) 2809248

Hours: 18 email: abhilash@iimk.ac.in

Course Background Financial Management, as one of the functional areas of business management, concerns basically with managing the cash flows of the entire business. Hence by implication, at the operational level, it manifests as a supportive function; but at the corporate level, it assumes strategic importance as it is charged with the responsibility of maximizing the value of the firm. FM II basically introduces you to the advances in estimation of cash flows and related valuation techniques, financing techniques (both long term and short term), investor rewards as well as management of working capital. Learning Outcomes The course aims at developing a clear understanding of the concepts and techniques involved in managing the finance function of a corporation. At the end of the course, the students should be able to: Analyse relevant factors that have bearing on the investment, financing and dividend decisions. Evaluate long term investment requirements. Arrive at efficient methods of reducing the need for short term capital and thus enhance share holder value. Readings Text Book Chandra, P, Financial Management: Theory and Practice, 7e, TMH, New Delhi. (PC) Reference Books Brealey and Myers, Principles of Corporate Finance, 7e, T MH, New Delhi (BM) Damodaran, A, Investment Valuation, 2e, John Wiley and Sons, New York (AD) IM Pandey and Ramesh Bhatt, Cases in Financial Management, 2e, TMH, New Delhi (PB) Damodaran, A., Corporate Finance: Theory and Practice, 2e, J, New Delhi (AD) Assessment Assignments Quizzes Term-end Examination 10% 40% 50%

Session

Topic Advanced Aspects of valuation

Text / Reading / Case / Exercise Class PPTs (Primarily adapted from various chapters of AD) some ideas are also covered in Chpt. 32 (PC) Case: Mechanical Drying Equipment (Reading Material) Class Notes Case : Marriott Inc. (Reading Material) Reading Material 1) Luehrman, Timothy A, 1997, Whats it worth? A General Managers Guide to Valuation, Harvard Business Review, May-June issue, pps. 132-142. 2) Luehrman, Timothy A, 1997, Using APV: A Better Tool for Valuing Operations, Harvard Business Review, May-June issue, pps. 145-154. Case: Sampa Video Inc. Chpt. 24 + Class Notes

1 Case on replacement decision 2 Leverage and Cost of Capital

Adjusted Present Value Approach to Valuation

4 5 6 7

Leasing & Hire purchase as a source of Financing Case on leasing and HP Capital Structure Working Capital Management

Case : Vishal Engineering Ltd. Chpts 19 and 20.1 to 20.4 Class PPTs (some related ideas are broadly covered in Chpts. 27 to 30 in PC) If time permits then shall cover the following Valuing Options Reading Material Introduction to Real Options Reading Material