course outline - financial management

7/23/2019 Course Outline - Financial Management

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Department of Management SciencesGIK Institute of Engineering, Sciences and Technology

MS344 Financial Management

Pre-Requisite: MS101 Business MathematicsInstructor: Dr. Mian Muhammad AtifOffice: -0!" Bra#ers Bui$din%" I& Institute" '(t. ))*1 'mai$: mmatif+%i,i.edu.,

Office ours: /o #e announced in the c$ass

Course Introduction

/he o#ectie of this course is to introduce the students to the #asic rinci$es used in financia$

mana%ement and their a$ications in $on%-term inestment and financin%. /his course introduces

students to fundamenta$ rinci$es of finance i.e. time a$ue of mone2 and re$ations #et3een ris, and

return" MM theories of irre$eance and efficient mar,ets. /hrou%h e(osure to these fundamenta$

concets it is e(ected that the students 3i$$ $earn ho3 to a$2 their ,no3$ed%e the a$uation of stoc,s

and #onds" financia$ $annin%" caita$ #ud%etin%" $on%-term financin%" caita$ structure" diidend o$ic2"

3or,in% caita$ mana%ement" and ris, mana%ement.

Course Contents

Meanin% and Scoe of 4inancia$ Mana%ement and ro$e of finance mana%er.

5nderstandin% financia$ statements and cash f$o3s /ime 6a$ue of Mone2

7aita$ Bud%etin%"

Ris, and Return

/he 7ost of 7aita$

7aita$ Structure

8or,in% 7aita$ Mana%ement

Mapping of CLOs and PLOs

Sr. No Course Learning Outcomes PLOs Blooms

a!onom"

79O

1

/he #asics of finance theor2 and its a$ications to

cororate financia$ decisions

P9O)"P9O;"

P9O


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4ina$ '(am 0 0 ?0 ?0 0


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)rading Polic"

AnnouncedSurrise @uies 0?C

ProectAssi%nment 1?C

7$ass Particiation 0?C

Mid /erm '(am )?C

4ina$ '(am ?0C

e!t and *eference Boo+s

e!t Boo+,

Ross" S." 8esterfie$d" R." ordan" B. E9atest 'ditionF. 'ssentia$s of 7ororate 4inance. Mcra3-i$$: Ir3in:

7hica%o

*eference Boo+s,

Ross" S. A." 8esterfie$d" R." G ordan" B. D. E)00


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annuity-due pro'lems% (alculate the $alue, cash .o/, or interest rate in a

perpetuity pro'lem (alculate the F* or * of a series of une$en cash

.o/s )i%e%, compound or discount the (ash .o/s+ &dapt all F* and *

calculations to other-than-annual compounding periods (ompute the

solution for $arious time $alue of money pro'lems%

3 & 4 The Basics of Capital Budgetingdene capital 'udgeting descri'e and calculate four methods used to

e$aluate capital pro0ects1 pay'ac2 period, discounted pay'ac2 period,

net present $alue )3*+, and internal rate of return )I44+ e5plain the 3*

prole e5plain the relati$e ad$antages and disad$antages of the 3*

and I44 methods, particularly /ith respect to independent $ersus

mutually e5clusi$e pro0ects Descri'e and calculate the modied I44

)MI44+ E5plain the 6multiple I44 pro'lem7 and the condition that can

cause the pro'lem E5plain /hy 3*, I44, and MI44 methods can

produce con.icting ran2ings for capital pro0ects%

5 & 6 Cash Flow Estimation and Other Topics in Capital Budgeting

Distinguish 'et/een cash .o/s and accounting prots Dene thefollo/ing terms and discuss their rele$ance to capital 'udgeting1

incremental cash .o/, sun2 cost, opportunity cost, e5ternality, and

canni'ali"ation Dene an e5pansion pro0ect and a replacement pro0ect

Determine 'y 3* analysis /hether a replacement pro0ect should 'e

underta2en Dene initial in$estment outlay, operating cash .o/ o$er a

pro0ects life, and terminal-year cash .o/, and compute each measure

for an e5pansion pro0ect and a replacement pro0ect (ompare t/o

pro0ects /ith une8ual li$es, using 'oth the replacement chain and

e8ui$alent annual annuity approaches Discuss the e9ects of in.ation on

capital 'udgeting analysis%7 & 9 Ris and Return

Stand &lone 4is2 The Trade #9 'et/een 4is2 and 4eturn Dene and

e5plain le$erage, 'usiness ris2, sales ris2, operating ris2, and nancial

ris2 and classify a ris2, gi$en a description (alculate and interpret the

degree of operating le$erage, the degree of nancial le$erage, and the

degree of total le$erage Descri'e the e9ect of nancial le$erage on a

company:s net income and return on e8uity (alculate the 'rea2e$en

8uantity of sales and determine the company:s net income at $arious

sales le$els (alculate and interpret the operating 'rea2e$en 8uantity of

sales

10 &

11

!nalysis of Financial StatementInterpret common-si"e 'alance sheets and common-si"e income

statements and demonstrate their use 'y applying either $ertical

analysis or hori"ontal analysis (alculate and interpret measures of a

company:s operating e;ciency, internal li8uidity )li8uidity ratios+,

sol$ency, and prota'ility, and demonstrate the use of these measures in

company analysis (alculate and interpret 'asic earnings per share and

diluted earnings per share (alculate and interpret 'oo2 $alue of e8uity


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per share, price-to-earnings ratio, di$idends per share, di$idend payout

ratio, and plo/'ac2 ratio Descri'e the elements of operating cash .o/s

Descri'e the elements of in$esting cash .o/s Descri'e the elements of

nancing cash .o/s (lassify a particular item as an operating cash .o/,

an in$esting cash .o/, or a Financing cash .o/ (ompute, e5plain, and

interpret a statement of cash .o/s, using the direct method and theindirect method (ompute free cash .o/%

12 &

13

Capital StructureE5plain the Modigliani


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/or2ing capital e9ecti$eness of a company 'ased on its operating and

cash con$ersion cycles, and compare the company:s e9ecti$eness /ith

that of peer companies E$aluate /or2ing capital e9ecti$eness of a

company 'ased on its operating and cash con$ersion cycles, and

compare the company:s e9ecti$eness /ith that of peer companies

E$aluate /or2ing capital e9ecti$eness of a company 'ased on itsoperating and cash con$ersion cycles, and compare the company:s

e9ecti$eness /ith that of peer companies E5plain the e9ect of di9erent

types of cash .o/s on a company:s net daily cash position (alculate and

interpret compara'le yields on $arious securities, compare portfolio

returns against a standard 'enchmar2, and e$aluate a company:s short-

term in$estment policy guidelines E$aluate a company:s management of

accounts recei$a'le, in$entory, and accounts paya'le o$er time and

compared to peer companies E$aluate the choices of short-term funding

a$aila'le to a company and recommend a nancing method

course outline - financial management

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