Course Outline: Financial Management II
Course code: Click or tap here to enter text.
Credit: 3, Core Elective Course
Area: Finance and Accounting
Program: PGDM
Term III, Academic Year 2023-25
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Instructor(s) Prof. Reena Nayyar Prof. Chhavi Mehta Ms. Shivani Chopra
Name
Room no. 411 405
Email
[email protected] [email protected] [email protected] Phone (Extn 139 335
no.)
Meeting Any day with a prior Any day with a prior Any day with a prior
Hours appointment appointment appointment
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1. COURSE DESCRIPTION
The Financial Management II course covers the concepts, and theories of capital structure and
dividend policy decisions. Further, it course delves deeper into component-wise issues related to
working capital management. In addition, the course covers the concept of leasing as an
alternative source of financing. The purpose is to make the students understand the practical
applicability of various financial decisions covered in the course.
2. COURSE OUTCOMES (COs)
After going through the course, the students would be able to:
Course Outcome 1 (CO1): Analyze a firm's capital structure.
Course Outcome 2 (CO2): Evaluate different methods of rewarding the shareholders.
Course Outcome 3 (CO3):
Analysing various components in working capital management decisions.
Course Outcome 4 (CO4): Evaluate leasing decisions in a firm.
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3. MAPPING OF THE PROGRAM OUTCOMES (POs) & 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,
evaluating alternatives on the basis of multiple 3 3 3 3
perspectives and presenting a solution including
conclusions and implications.
PO4: Student should be able to demonstrate
problem solving skills by understanding and
defining the problem, analyzing it and solving it by 3 3 3 3
applying appropriate theories, tools and techniques
from various functional areas of management.
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: Student should be able to identify challenges
faced by the organization at the global level.
PO8: Student should be able to take decisions in
the global business environment.
4. PEDAGOGY
The pedagogy for this course will be a judicious mix of lectures, problem-solving, and case analysis. Active part
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5. COURSE EVALUATION COMPONENTS (CECs)
1. Class participation (5%): Students will be evaluated for their active contribution to class
preparation based on the prerequisite readings, case discussions, class contribution, and
overall conduct in every class.
2. Quizzes (20%): There will be n number of quizzes, and the best of n-1 will be considered for
final evaluation. The quizzes could be announced or unannounced. Therefore, keeping pace
with the course covered will be necessary.
3. Group Assignments (15%): Each group is expected to work on assignments allocated by
the instructor after completing a particular module. The assignments will entail
understanding and analysis of important financial decisions across various industries
allocated to the groups.
4. Mid-term (30%): The mid-term exam will include all the topics covered till midterm. The
exam will assess subject understanding by applying concepts to analyze real-life business
situations.
5. End-term (30%): The end-term exam will include all the topics covered during post-mid-
term sessions. The exam will assess subject understanding by applying concepts to analyze
real-life business situations.
6. MAPPING BETWEEN COs, POs, and CECs
Course Evaluation Components (CECs)
Class Quiz Assignments Mid-term End-term
COs POs
participatio
n
PO3
CO1 ✓ ✓ ✓ ✓
PO4
PO3 ✓
CO2 ✓ ✓ ✓
PO4
PO3
CO3 ✓ ✓ ✓ ✓
PO4
PO3
CO4 ✓ ✓
PO4
7. RESOURCES
7.1 Textbook
Contemporary Financial Management, R. Charles Moyer, James R. McGuigan and
Ramesh P. Rao, 14th edition, Cengage, 2018.
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7.2 Reference Books
Financial Management and Policy, J. C. Van Horne and S. Dhamija, 12th edition,
Pearson, 2019.
Financial Management: Theory and Practice, E. F. Brigham and M. C. Ehrhardt, 14 th
edition, Cengage Learning, 2015.
Corporate Finance, Stephen A Ross, R. W. Westerfield, J. Jeffe, B. D. Jordan, R. K.
Kakani, 11th edition, McGraw Hill, 2018.
Financial Management: Text, Problems and Cases, M. Y. Khan and P. K. Jain, 8 th edition,
McGraw Hill, 2019.
Principles of Corporate Finance: R. A. Brealey, S. C. Myers, F. Allen, P. Mohanty, 12 th
edition, McGraw Hill, 2019.
7.3 Online References (if any)
Corporate websites for annual reports
moneycontrol.com
in.finance.yahoo.com
8. SESSION PLAN
Session Topic Chapter/
No. Readings
1 Capital Structure Concepts Chapter 13
Capital structure decisions and
maximization of shareholders’ wealth https://www.coursera.org/learn/corporate-
Business risk and financial risk finance-essentials-ii#modules
Module – 5
2 Capital Structure Theories Chapter 13
Capital structure without income tax
Capital structure with income tax
Capital structure: Financial distress
costs and agency costs
Value maximizing capital structure
Cost of capital and optimal capital
structure
3 Capital Structure and Leverage Chapter 14
Operating and financial leverage
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Effect of leverage on shareholders'
wealth and cost of capital
4 Capital Structure Decisions Chapter 14
EBIT-EPS Analysis
Capital structure decision and corporate
governance
5 Capital Structure Decisions Chapter 14
Case discussion
HBP Case
(#5-292-050): Continental Carriers Inc.
6 Dividend Decisions Chapter 15
Determinants of dividend policy
https://www.coursera.org/learn/corporate-
finance-essentials-ii#modules
Module – 6
7 Dividend Decisions Chapter 15
Dividend policy and firm value
Dividend policies in practice Ivey Note (#W18603):
o Stable dividend policy A Note on Dividend Policy
o Residual dividend policy
o Other policies
8 Dividend Decisions Chapter 15
Stock dividends and stock splits
Share repurchase The Case Center Case (#144-081-1):
Dividend policies of selected Indian Dividend Policy of Infosys Limited: To pay
companies or not to pay, that is the question
9 Dividend Decisions Chapter 15
Dividend decision and corporate
governance The Case Center Case (#144-081-1):
Case discussion Dividend Policy of Infosys Limited: To pay
or not to pay, that is the question
10 Working Capital Introduction Chapter 16
Importance of working capital Pg 574 – 589
Operating cycle analysis Class exercise
https://www.coursera.org/learn/operational-
5
finance#modules
Module – 3
11 Estimating Working Capital Class exercise
Requirements
12-13 Receivable Management Chapter 18
Credit terms Class Exercises
Cost-benefit analysis Pg 660 – 673
Credit policies
Collection policy Darden Note (#UV8022):
Trade Credit
Caselet:
Adidas India Ltd.
14 Inventory Management Chapter 18
Objectives of inventory management Pg 673 – 683
Analysis of investment in inventory
Caselet:
Indus Engineering Limited
15-16 Cash Management Chapter 17
Need for cash management
Cash budget HBR Article (#R0905E):
Managing cash collection and Need Cash? Look inside your company
disbursement
Investment of surplus cash in marketable
securities
17 Working Capital Financing Chapter 16
Trade credit/ Bank credit as a source of Pg 589 – 609
working capital finance
Commercial paper HBS Note (#93K009):
Factoring A Note on Financing Alternatives
18 Working Capital Management Decision HBP Case (#9-201-029):
Case discussion Dell’s Working Capital
19-20 Alternate Source of Financing: Lease Chapter 19
Finance Class exercise
Introduction to leasing
Types of lease arrangements
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Deciding minimum lease rentals
Analysis of lease versus buy/borrow
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 a penalty. The type and extent of the 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/a
list of sources that 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.
