School of Inspired Leadership
Financial Management
Faculty: Prof. Neetika Batra Program: BLP/ HRLP
Phone: 9871730001 Contact Hours: 25
Email:
[email protected] Sessions: 17
COURSE DESCRIPTION: This is a basic course on financial management. The principles of financial
management are general in nature and are therefore, applicable in all spheres, including corporate
setup, self business, own money/ savings, and so on.
Broadly, they fall into the following main categories:
- Financing decisions: how and in what form to raise funds: i.e. capital structure decisions, and
therefore, implications for payout policy.
- Investment decisions: how to deploy funds, i.e. Project Finance or Capital Budgeting decisions.
- Funds Management decisions, which involves mainly Working Capital Management.
The present course on Financial Management (sometimes termed as, “Corporate Finance”) looks at the
“big picture” of finance and seeks to go into the interrelationship between the above categories of
decisions.
The other applied and strategic concepts of finance, eg. Valuation, Portfolio Management (Risk and
Return), Financial analysis will be covered later in advanced/ specialized finance courses.
LEARNING OUTCOMES: By the end of this course, the students should be able to understand the basic
principles governing financial decision-making, including those relating to:
- Financing Decisions
- Investment decisions
- Funds Management decisions
REQUIRED MATERIAL:
TextBook:
1. Financial Management – Prasanna Chandra – Tata Mcgraw Hill
2. Principles of Corporate Finance – Richard A Brealey, Stewart C Myers and F. Allen.
Reference Books
1. Financial Management textbook of ICFAI Hyderabad and supplemented with workbook on
Financial Management published by ICFAI, Hyderabad
2. Fundamentals of Financial Management by Eugene F.Brigham and Joel F.Houston (Cengage
Learning)
3. Financial Management by Rajiv Srivastava and Anil Misra (Oxford Higher Education)
4. Corporate Finance – Aswath Damodaran – Wiley press
5. Financial Management, M.Y. Khan and Jain
6. Financial Management, by I.M. Pandey
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PEDAGOGY & EVALUATION:
1. Basic concepts will be explained in the class. Focus will be on interactive discussions.
2. Case studies, simulation and research project work will be used to understand the application of
concepts covered in class. This is also intended to promote teamwork and research orientation in
students.
3. Live cases and developments in the business world/ economy will also be highlighted to
understand the connection of concepts covered in class with the business world.
4. Quantitative/ Numerical analysis ability will be developed and practiced through assignments and
workbook practice. Focus will be on using excel to develop financial models.
5. The concepts of this course will also be linked to those in other related courses like accounting,
economics etc.
6. To promote an interdisciplinary approach and ability of students to understand the overall
business at a macro level rather than at functional level, the concepts of this course will be linked
to those in other domains like marketing, operations, HR, analytics through a larger project work
aimed to create a business plan.
Tentative Evaluation plan
Simulation work presentation 10%
Assignments/ Quizzes/ Mid-term test 20%
Final Research Presentation 30%
End Course exam 40%
GRADING
Students are graded based on their absolute performance level. There is no relative grading among the
students. There are 5 grades as given below. If a student does not meet the minimum requirements to
earn the lowest grade, the faculty may choose not to grade him/her. For a student to achieve a particular
grade, the requirements of the previous grade levels must be met.
1. Novice: has not shown the ability to grasp the course contents, needs lot more effort.
2. Beginner: has a very broad and basic understanding but needs more effort
3. Competent: is primarily comfortable with the course requirements
4. Accomplished: has a very good understanding of the subject and is able to apply that intelligently
5. Role Model : is very well accomplished in subject matter, in practical understanding and
application of the same, is ingenuous in his/ her ideas, and has good presentation skills
APPLICATION OF LEARNING
A lot of emphasis will be placed on discussions of current developments in the world of finance from the
corporate sector, their implications and linkages to the concepts learnt in the class. Also, regular
assignments, case discussions, simulations will assist the students in understanding practical applications
of the subject.
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Simulation work: Students will also be required to create groups, each of which will run a simulation of a
self-created venture. They will apply the concepts learnt in the topic covered during each class on this
simulated venture and present their analysis and findings at the end/in next class.
ASSIGNMENTS/ PROJECTS
Assignments will be given from time to time to practice and test the ability of students to grasp the
concepts discussed in the class.
Research project: Students will also be required to work in groups on a live research project to study and
present financing decisions of a company in an industry of their choice. However, duplication of industry
is not permitted. This should mainly cover its:
1. Fund raising strategies: how, from which market and in what form funds were raised by the
company in last 5 years, and why.
2. Capital structure Strategy: why the capital structure is kept by the company in that form
3. Cost of capital for the company: computation and comment on whether it is too high or low, and
why
4. Payout Strategy: trace the history of its payout policy for last 5 years and comment on why such a
strategy is followed by the company
5. Any investment decisions taken by the company in last 2-5 years and comment on its
performance
6. Working capital management strategy of the company: current assets vs. current liabilities,
working capital cycle.
7. Market value of the shares of the company (monthly closing for last 2 years): analyse and
comment on its performance, esp. vis a vis the market index and with other key competitors
Focus of the project presentation should not be only on data collection, but more on analysis,
especially by comparing with other players in the industry.
SESSION PLAN (Financial Management book by Prasanna Chandra)
(Please also refer to the appendix for corresponding chapters from the book by Brealey & Myers)
Methodology/ Preparation
Chapter/Sections, in
Session Topic assignments (pre+ post)
Textbook
Time
- 1, 2: quick Pre read Chapters, then 6 hours
1. FINANCING DECISIONS:
Reading; class discussion
A. Financial system: Overview
1 of Finance – Markets,
- 17, 18:
portions
Instruments, Services
covered in
class
B. Capital structure Decisions: - 17, 18; Facebook, Inc: The 6 hours
2-3 Debt vs. Equity: Financial - 20.3 for Leverage Initial Public Offering
Leverage analysis; 20.7 and 20.8
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Students to 5 hours
simultaneously work on
C. Payout Decisions: Dividends, simulation and present
4 22
Bonus shares, Share Buybacks (for entire topic in 1 i.e.
A,B,C & D, on Financing
Decisions)
D. Cost of Capital : Cost of Simulation and 5 hours
5 14
Equity and Debt, WACC presentation as above
2. INVESTMENT DECISIONS: Class discussion and 5 hours
6 A. Time Value of Money 6 numerical practice
B. Applications of TVM: Class discussion and 10 hours
(i) Loan repayments, fund numerical practice
raising/ saving etc.
(ii) Capital Budgeting
techniques: Project Finance for
- 6 for (i)
projects with limited life: Cash
- 11,12 for (ii)
7-10 flow estimation and assessment
techniques like Net Present - Portions of 7
Value, IRR, payback period. and 32 for (iii)
(iii) DCF (briefly): Valuation of
Equity shares, companies with
unlimited (perpetual) life
Case Analysis: 4 hours
11 Case Study on Capital Budgeting Investment Analysis and
Lockheed Tri Star
Mid Term evaluation
Risk & Return Relationship in
12 brief 8
3.FUNDS MANAGEMENT Class discussion 4 hours
13 DECISIONS: Working Capital 23
Management
14-15 Practice Work
16- 17 Assignments and Student Presentations
End Term Evaluation
GENERAL GUIDELINES: Students will need to keep themselves updated on the current corporate events
by regularly reading business newspapers, magazines, related websites and so on. They will also need to
continuously practice the quantitative problems, through excel/ manually/ both, as suggested in the
course.
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FACULTY PROFILE
Dr. Neetika Batra holds a Ph.D. and master’s in finance from Delhi University, and is a graduate from
SRCC. She has a career spanning about 30 years, almost equally divided between industry and
academics. She started her career in the year 1990 in Investment banking with SBI Capital Markets Ltd.
She was initially heading an equity scheme of SBI Mutual Fund. Thereafter, she was heading a team of
Corporate Finance professionals, as Vice President for several years, handling activities like issue
management, funds syndication, project advisory services. She co-founded her own boutique
investment banking company in the year 2005, which later got merged with another investment bank.
Simultaneously, she started getting involved in teaching and consulting assignments. Before joining SOIL
in 2011, she was a visiting faculty to many prestigious B-schools, teaching a variety of core and
specialization subjects in Finance. She has also been into designing and conducting various MDPs and
corporate training programs. In addition, she has written a text book on “Investment Planning” for an
institute she had worked with.
Apart from journal publications, she has also written a textbook on “Investment Planning”. Her Ph.D. and
research work are mainly in the area of Priority Sector Lending by Banks in India.
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Appendix: Some more on course material for easy reference for finance courses:
Topic Chapter Number in Chapter Number in
Prasanna Chandra Brealey & Myers book
book
1 Overview (FIM) 1,2,17,18 1,14, 15
2 Time Value of Money 6 2
3 Capital Budgeting 11 5
4 Cash flows 12 6
5 Risk & Return (beta/ CAPM) 8 7, 8.2
6 Cost of Capital 14 9 (partly)
7 Valuation of securities 7 Bond valuation: 3.1, 3.2
Equity Valuation: 4
8 Capital Structure 20 14, 18
9 Working Capital Management 26 30
10 Financial Statement Analysis 4 28
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