Course Outline: Financial Management – I
Course code: Click or tap here to enter text.
Credit:3 , Core Course
Area: Finance
Program: PGDM-B&FS
Term: II Academic Year: 2020-22
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Instructor(s) Name Faisal Nazir Zargar
Room no. 207
Email Faisal.nazir@imi.edu
Phone (Extn no.) +91-11-47194121
Meeting Hours As per the mutual convenience
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1. COURSE DESCRIPTION
The course aims at covering in detail two specific areas of financial management – Capital Budgeting (or
Investment Decisions) and Capital Structure (of Financing Decision). The course will cover the following
aspects:
• Understanding the scope of financial management and role of Finance Manager and inter-
relationship with other functions
• Time Value of Money
• Financial evaluation of capital expenditure projects
• Capital Structure Theories
• Determinants of Capital Structure
2. COURSE OUTCOMES (COs)
After going through the course, the students would be able to:
Course Outcome 1 (CO1): Explain the various decisions taken by a financial manager
Course Outcome 2 (CO2): Analyze problems related with the time value of money, capital
budgeting decisions, cost of capital, financial leverage and capital structure
Course Outcome 3 (CO3): Analyze investment projects and capital structure alternatives and
be able to offer solutions
Course Outcome 4 (CO4): Apply the tools & techniques for stock and bond valuation
3. MAPPING OF THE PROGRAM OUTCOMES (POs) AND COURSE OUTCOME (COs)
Course Outcomes (COs)
Program Outcomes (POs)
CO1 CO2 CO3 CO4
PO1: Student should be able to write well organized and
grammatically correct business reports and letters.
PO2: Student should be able to make effective oral presentations.
PO3: Student should be able to demonstrate critical thinking skills by
understanding the issues with a strong focus on banking and financial
services, evaluating alternatives on the basis of multiple perspectives 3 3 3 3
and presenting a solution including conclusions and implications
PO4: Student should be to demonstrate problem solving skills by
understanding and defining the problem related particularly to banking
and financial services, analyzing it and solving it by applying 3 3 3 3
appropriate theories, tools and techniques.
PO5: Student should be able to illustrate the role of responsible
leadership in management.
PO6: Student should be able to identify social concerns and ethical
issues in management.
PO7: Students should be able to identify challenges faced by banks
and financial institutions in the global business environment.
PO8: Student should be able to take decisions in the global business
environment with special focus on banking and financial institutions.
4. PEDAGOGY
The course will be primarily taught through a combination of class lectures, discussions,
numerical problems, case analysis, etc. Both the teacher and the students will actively share
and discuss the latest happenings of the real-world relevant to the course topics. Students are
also encouraged to make use of MS Excel for problem solving and case analysis.
5. COURSE EVALUATION COMPONENTS (CECs)
Component 1: Quizzes (30%)
The quizzes will be compulsory and will be spread across the entire course. If any student misses
any quiz, no makeup quiz will be given later.
Component 2: Class participation (10%): Students will be evaluated for their active contribution
in class discussions, relevance of contribution and overall conduct during classes.
Component 3: Mid Term (30%)
Mid-term exam will cover approximately half of the total course. Exact syllabus will be announced
by the faculty in advance. Questions asked will cover theoretical concepts as well as assess
analytical capability.
Component 4: End Term (30%)
End term exam will include all the topics that will be covered during post midterm sessions. The
exam will assess subject understanding through application of concepts to analyze real life
business situations.
6. MAPPING BETWEEN COs, POs and CECs
Course Evaluation Components (CECs)
COs POs
CEC1 CEC2 CEC3 CEC4
CO1 PO3 ✓ ✓ ✓
CO2 PO3 ✓ ✓ ✓ ✓
PO4
CO3 PO3 ✓ ✓ ✓ ✓
PO4
CO4 PO3 ✓ ✓
PO4
7. RESOURCES
7.1 Textbook
• Financial Management Principles and Applications: S. Titman, A.J. Keown, J.D. Martin,
Latest Edition.
7.2 Reference Books
• Richard A. Brealey and Stewart C. Meyers, Franklin Allen and Pitabas Mohanty, Principles
of Corporate Finance, New Delhi, Tata McGraw Hill. Latest Edition (11th Edition). ISBN-
10: 1259004651, ISBN-13: 978-1259004650
• James C. Van Horne and Sanjay Dhamija, Financial Management and Policy, 12th edition,
Pearson, 2010
• M. Y. Khan & P. K. Jain, Financial Management, 6th edition, Tata McGraw-Hill Publishing,
2011
• I M Pandey, Financial Management, 9th edition, Vikas Publishing House Pvt. Ltd.
7.3 Online References (if any)
• Corporate websites for annual reports
• moneycontrol.com
• in.finance.yahoo.com
8. SESSION PLAN
Session Topic Reading
1 Overview of Financial Management Textbook
• An overview of finance (Ch. 1)
• The goal of financial management
• The agency problem
2 Time Value of Money Textbook
• Timeline (Ch. 5)
• Compounding and Future Value
• Discounting and Present Value
• Making interest rates comparable
3 Time Value of Money Textbook
• Annuities (Ch. 6)
• Perpetuities
4-5 Practical Applications of Time Value of Money Integrated
• Concept discussion in real-life situations Exercise
• Problem Solving using excel
6 Investment Decision Criteria (Capital Budgeting) Textbook
• An Overview of Capital Budgeting (Ch. 11)
• Investment Criteria/Techniques of Capital Budgeting:
o NPV
o Profitability Index
7 Investment Decision Criteria Textbook
• Investment Criteria/Techniques of Capital Budgeting: (Ch. 11)
o IRR
o MIRR
Payback Period
o Discounted Payback Period
8 Analyzing Project Cash Flows Textbook
• Project Cash Flows (Ch. 12)
• Forecasting project cash flows
9 Analyzing Project Cash Flows Textbook
• Inflation and Capital Budgeting (Ch. 12)
• Replacement Project cash flows
10 Capital Budgeting Decision Case
Discussion:
Opening a
New CNG
Pump
Station
11 Cost Of Capital Textbook
• Concept of cost of capital (Ch. 14)
• Determining the firm’s capital structure weights
• Estimating the cost of individual sources of finance:
o Debt
12 Cost Of Capital
• Estimating the cost of individual sources of finance: Textbook
o Preferred equity (Ch. 14)
o Common Equity – Dividend Discount Model
13 Cost Of Capital Textbook
• Estimating the cost of individual sources of finance: (Ch. 14)
o Common Equity – CAPM
o Concept of beta
• Calculating the firm’s weighted average cost of capital
14 The Cost of Capital Decision Case
Discussion:
The Pioneer
Petroleum
Corp.
(292011)
15 Capital Structure and Leverage Textbook
• Defining a firm’s capital structure (Ch. 14)
• Concept of Operating, Financial and Combined Leverage &
Handouts
16 Capital Structure and Leverage Textbook
• Capital Structure Theories (Ch. 15)
• Capital structure importance in reality
• Differences in capital structure across industries
17 Capital Structure and Leverage Textbook
• Making financing decisions (Ch. 15)
o Benchmarking the firm’s capital structure
o Evaluating the effect of Financial Leverage on EPS
o EBIT-EPS Analysis
18 Capital Structure and Leverage Case
• Problem Solving & Case Discussion Discussion:
Continental
Carriers,
Inc.
(291080)
19 Stock Valuation Textbook
(Ch. 10)
20 Bond Valuation Textbook
(Ch. 09)
9. ACADEMIC INTEGRITY & CLASS RULES
a) Plagiarism is the use of or presentation of ideas, works that are not one’s own and which are not
common knowledge, without granting credit to the originator. Plagiarism is unacceptable in IMI
and will invite penalty. Type and extent of penalty will be at the discretion of the concerned faculty.
b) Cheating means using written, verbal or electronic sources of aid during an examination/ quiz/
assignment or providing such assistance to other students (except in cases where it is expressly
permitted by the faculty). It also includes providing false data or references/list of sources which
either do not exist or have not been used, having another individual write your paper or assignment
or purchasing a paper for one’s own submission. Cheating is strictly prohibited at IMI and will
invite penalty as per policies of the Institute.
