Course Outline

1. Subject Name
2. Course Code
3. Instructor
4.
5.
6.
7.
8.

Academic year
Trimester
Duration
Sessions
Credit Points

: Financial Management II
: FIN 1103
: Dr.S.Chatterjee Session 1-10
Prof: S.Poddar Session 11-20
: 2015--16
: III
: January 4 March 19, 2015
: 20 sessions of 1.5 hours duration each
: 3 credit course

Course Description and Objectives

The course aims at developing an in-depth understanding of modern corporate
finance theory and its application in real life business situations focusing on the following
aspects:

Management of Working Capital

Sources of Long term Finance

Managing public issue of securities

Non-conventional sources of finance equipment financing and securitization

Framework and Methodology of Securities Valuation

Risk Analysis in Capital Budgeting (Decision Tree, Monte Carlo Simulation)

At the end of the course the students should be able:

To appreciate various aspects of rewarding the shareholders

To be able to take decisions on efficient management of working capital

To understand the steps involved in managing public issue of securities

To understand the rationale behind lease financing and securitization

To apply the valuation framework for fixed income securities and equity shares

To conduct risk analysis in capital budgeting decisions using scenario analysis,

sensitivity analysis, decision tree and Monte Carlo simulation

Course Outline
9. Pedagogy
Basic concepts and theoretical framework of the subject would be developed through systematic
lectures and class exercises. Besides lectures and numerical illustrations, case methodology
would be used to apprise the students with real life business situations. It is expected that the
students would come prepared with the readings and cases given.
10. Readings
Textbook
Corporate Finance: Ross, Westerfield, Jaffe, Kakani (RJWK) 8th Edition, Mcgraw Hill
(RJWK)
Other Reference Books
1)

Principles of Corporate Finance Brealey/ Myers /Allen / Mohanty

2)

Corporate Finance Aswath Damodaran

3)

Financial Management I M Pandey

4)

Financial Management M Y Khan & P K Jain

5)

Financial Management Prasanna Chandra

Case Studies: Will be distributed before the class. Students are expected to come prepared with
the cases.
11. Evaluation (Overall in terms of percentage and details in terms of numbers)
a)
Quiz
: 20%
b)
Group Assignments : 20%
c)
Midterm
: 30%
d)
End Term Exam
: 30%

12. Attendance Policy

100% attendance is compulsory for the course. For details of attendance related to
eligibility for examinations and grades, refer to handbook of information for students.

13. Contact Details of Instructor

( i) Dr.S.Chatterjee Mob : 9748792455, Email : sa.chatterjee@imi-k.edu.in
(ii) Prof. S.Poddar Mob: 9331010226, Email : s.poddar@imi-k.edu.in

Course Outline
14. Detailed Session Plan
Session
No.
1

Topic

Chapter /Readings

Cash Management
Need for cash management
Techniques for cash management
Investment of surplus cash
Cash Management Services (CMS)

Chapter 27 (RJWK)

Chapter -28 (RJWK)

2.

3-4

Receivable Management
Need and goals of a sound credit policy
Understanding of credit policy variables
Monitoring receivables
Factoring/ Forfaiting
Inventory Management
Objectives of inventory policy
Techniques of Inventory Management
EOQ/ Re Order Level/ JIT

Case Analysis

5-10

Working Capital Management Overview

Working Capital policy
Concept and importance of working
capital management
Types of Working Capital
Working Capital Estimations and Financing:
Working Capital Estimation
Trade Credit/ Bank Credit as a source of
working capital finance
Commercial Paper

Chapter 26 (RJWK)
Chapter 29 ( Brealey, Myers)
Reading
Note on Bank Loans
Case Analysis:
Group Presentation

11

Long Term Sources of Finance -1

IPO , Private Placements and Public Issues

Chapter 14, 19 (RJWK)

12

Long Term Sources of Finance -2

Corporate bonds , bond ratings , bond
features
Bank Loans , Commercial paper

Chapter 20 (RJWK)

Course Outline

13

Long Term Sources of Finance -3

Leasing- Types
Taxes and Cash Flows
Lease vs Buy decision

Chapter 21(RJWK)

14-15

Valuation of Long Term Securities

Valuation of Bonds

Equity Share Valuation methods

Chapter 4 and 5 (RJWK)

16

Overview of Financial Derivatives and

Financial risk management
Warrants and Convertibles
Advanced Capital Budgeting Risk Analysis

Chapter 22 and 25 (RJWK)

17
18

19
20

Understanding the concept of risk in

investment decisions
Techniques for adjusting risk
Sensitivity/ Scenario Analysis
Simulation / Decision Tree

Overview of Corporate Governance and

Control
Overview of Mergers , Acquisitions and
Restructuring

Chapter 24 (RJWK)
Chapter 8 (RJWK)
Case Analysis

Chapter 33 (Brealey , Myers)

Chapter 29 (RJWK)