Subject OutlineSubject for Subject Code & Title Subject Title Subject Credits Section Instructor Office Phone Email Instructor’s Profile: Dr. Sudhindra Bhat is an MBA in Finance and has a degree MFM (Master of Financial Management). He has also completed M.Phil. and Ph.D. in Finance. Dr. Bhat is a professor of finance & accounts. He served for KPMG and Bharati Airtel,, ABA, Adarsh Group etc., He is a visiting professor and consultant for various foreign universities specially AUT, New Zealand, Dallas university, Sweden school of economics, SP Jain Singapore & Dubai. Dr. Bhat is author of 3 books, Management accounting, Financial Management, Security Analysis & Portfolio Management. Dr. Bhat also a PHD guide for Alagappa university, VTU, AIMA and Aligarh Muslim university. Subject Description: Corporate finance is a specific area of finance dealing with the financial decisions. Finance is about money and market, but it is also people. The secret of success in financial management is to increase value. The subject raises the awareness of the role, purpose, and centrality of the finance function in effective corporate governance. This subject focuses on fundamental financial management from the perspective of inside the corporation or operating entity. It builds upon the concepts from the core finance subjects, where topics covered objective of finance, profit v/s wealth maximization, time value of money, financial markets & institutions, measuring risk and return, cost of capital, capital budgeting decision, optimal capital structure, long-term and short-term sources of fund, working capital management decision and capital market. 1 : : : : : : : : : MBA Semester I, July 2011 – 13 Batch MGT 522 Corporate Finance 3 Credits A Dr. Sudhindra Bhat Alliance University Central Campus, NF 010 080 - 30938291
[email protected] Prescribed Text Book Required materials : Financial Management. 2. 4. To explore the sources of long term finance & design financial strategies. To introduce concepts and objectives of corporate finance To understand concept of time of value in financial decisions To study different techniques of investment decisions To understand relationship between capital structure and the value of the firm. 6. M. 2. 5. Pandey. 3.Class Meets Office Hours : : As per Dean’s Office schedule By appointment only Objectives of the Subject : 1. 5. Lecture and Discussion Classroom Case discussion and analysis Presentation by students in Group Class exercises and Tests Surprise Test and Quiz Individual / Group Assignments 2 . Subject Culture and Pedagogy: 1. Latest Edition Vikas Publishing House Pvt. Ltd. 3. I. 4. the internal rate of return (IRR). 9 The learner will understand the concept and calculation of cost of capital of a business. payback period. Agency Problem. ARR.Net present value (NPV). Objective of corporation. IV. Future value – Single & Annuity.7. Investment Evaluation Techniques NPV. ARR. and Compare & Contrast NPV & IRR. Methods of calculating cost of capital – Cost of debt. Part . Part . wealth maximization in an organization. Time Value of Money: Time lines.2 Explain the role and business objectives of the finance manager. Wealth Maximization. Calculate the weighted average cost of capital and discuss its usefulness. effective and nominal rate of interest. CAPM model. Growing Annuities. preference share capital & equity share capital. Describe and calculate the cost of debt capital. 4. benefits and limitations of the different methods of investment appraisal . Assessment Criteria I. Explain the principles. accounting rate of return. sinking fund factor. Determination of Weighted Average Cost of Capital (WACC). 11. Payment perpetuities.2 Chapter 9 6. Financial Manager’s role. Finance function. Amortized loans * Problems Cost of Capital: Concept of opportunity cost of capital. amortization schedule. 5 The learner will understand the concept of present value. * Problems Assigned Reading Session No. III. PI. * Problems Investment Decisions – Capital Budgeting Nature of Investment Decision. Preference & Equity capital. PI. II. 13 The learner will be able to evaluate investment decisions using a variety of appraisal techniques like NPV. PBP. Learning Outcomes The learner will understand the role of the Corporate Finance Manager and the concept of profit vs. IRR. 3 . Semi-annual & other compounding period.Subject Structure Unit Content Overview of Corporate Finance: Scope of finance. Explain the methods of calculating present & future value and use of discounting & compounding techniques with the help of problems & cases. multi period of compounding.8. DPBP & conflict between NPV & IRR. IRR. Part – 1 Chapter 1 1. future value.1 Chapter 2 3. PBP. Financial goal: Profit Maximization vs. Simple & Compound interest.2 Chapter 8 10. Part . Present value – Single & Annuity. 12. Types of Investment decision. Profitability Index and Discounted PBP and be able to perform calculations in order to assess investment through problems & Cases. Credit Policies. Identify and explain the main long term sources of debt. Part . The student should have conceptual understanding of venture capital financing. * Problems Receivables management –Objectives. Liquidity . Profitability Aspect. Hybrid Financing Instruments. 19. 29. Leverage Ratios of other firms in the Industry.Unit Content Capital Structure Introduction. 20. Learning Outcomes The learner will understand the factors affecting the capital structure of the firm. 14. inventory & cash management.3 Chapter 17 16. The student should have conceptual understanding of credit. preference finance available to any size of business. Issues of Bonus shares in India Working Capital Management : Nature of working capital Planning of Working Capital. 28. lease & hire purchase financing. 30 18. 21 The learner will able to understand the different elements of working capital concept. Explain the differences between various sources of capital. cash & Inventory management. Dividend Policy: Factors affecting dividend policy. Calculate the estimation of working capital through problems and case studies. Assessment Criteria V. Share Splits in India. Part – 4 Chapter 20. VI. operating & cash conversion cycle. Objectives of holding cash. Debentures / Bonds and Securitization. Estimation of working capital investment. Explain the concepts of receivables. Control. Need & Objectives Cash Management . 17 The learner will understand the factors that determine a company’s dividend policy and forms of dividends and the conceptual understanding of buy back of shares. Management of Working Capital in India. Stock Repurchase. Venture capital Financing – Theoretical Framework & Venture Capital Scenario in India Assigned Reading Part . equity. Bonus Shares & Stock Splits. 23 22. operating & combined leverage & its impact on shareholders return & risk. VII. Inventory Management – Nature. Long-term sources of financing: Equity / Ordinary Shares – Issue Procedures. Explain and discuss the effects of dividends on shareholder’s wealth through presentations and different forms of dividend distributions. 24 The learner will understand the main sources of debt and equity funding and the significance of financial gearing. 15 Explain the practical consideration in determining the capital structure of the company through presentations.Motives. Financial & Operating and Combined Leverage. Credit Terms. Part – 6 Chapter 27 . Factors determining cash needs. Collection Policies & factoring. Planning the Capital Structure. the concept of financial. 4 . and estimation of working capital. and the advantages and disadvantages of each source of funds. 23. Term Loans. . 22.3 Chapter 14 Chapter 15 Session No. Lease Financing and Hire Purchasing. Ehrhardt & Eugene F. Principles of Corporate Finance [7/E] – Brealey Myers . 3. A Focused Approach Corporate Finance – Michael C. Financial Management – I M Pandey. Tenth edition . Sudhindra Bhat.Vikas Publication.Dr. Financial Management –Theory and Practice [6/E] – Prasanna Chandra – TMH 2. Brigham 5. Financial Management.Tata McGraw-Hill Scheme of Evaluation Grading System : : Refer to Alliance Learning Experience Program Catalogue Refer to Alliance Learning Experience Program Catalogue 5 .Theory & Practice II edition. Excel Publication 4.Reference Materials: 1.