Course: Financial Management

Semester: SPRING 2021

Course ID:
Faculty:

COURSE OUTLINE

PREREQUISITE COURSE
Introduction to Business Finance

COURSE OBJECTIVES
Financial Management course aims at imparting knowledge about the fundamental concepts and tools of
financial management. It emphasizes the importance of financial management skills to individuals and
enterprises. You are expected to gain an initial understanding of the finance function in an
organization, the role of the finance manager and the financial environment in which the firm
operates. The financial environment covers the understanding of financial and capital markets along with
the broad orientation of macroeconomic factors affecting the business. The emphasis will remain on
developing the skills for planning, appraising and evaluating the investment, financing and operating
decisions.

COURSE LEARNING OUTCOMES

After studyingthis course,students will beableto:

CLO 1: Apply capital budgeting techniques for appraising investment projects.

CLO 2: Undertake project cash flow analysis.
CLO 3: Perform risk analysis and prepare an optimal capital budget for a firm.
CLO 4: Perform financial forecasting and long term financial planning for a firm.
CLO 5: Analyze the existing capital structure of a firm and determine its optimal capital structure.
CLO 6: Analyze the dividend policy and stock repurchase decisions of a firm.
CLO 7: Analyze various leasing opportunities available to a firm.
CLO 8: Critically review the working capital management activities of a firm.
CLO 9: Discuss their course project work through a class presentation.
CLO 10: Understand the real-world application of the course topics through interaction with industry
professionals.

PROGRAM LEARNING OUTCOMES

PLO 1: Students have the skills to become an entrepreneur.

PLO 2: Students have the skills and knowledge required by the corporate sector.
PLO 3: Students have the abilities to serve at leadership positions.
PLO 4: Students develop analytical, problem solving and team working skills.
PLO 5: Students develop an understanding of the corporate business environment by working on
internships, industry based projects, guest speaker sessions, seminars, workshops.
PLO 6: Students are able to confidently deal with day to day activities of running a business.
PLO 7: Students are able to apply various analytical approaches for effective decision making.
PLO 8: Students are able to recommend out-of-the-box solutions to real world problems.
PLO 9: Students are able to understand the importance of ethical considerations in business.
PLO 10: Students are able to understand the role of organizations for performing social welfare activities.
PLO 11: Students are able to find suitable employment in the corporate sector according to their area of
specialization.
PLO 12: Students are able to add value to their respective organizations and the society at large.
PLO 13: Students have the necessary skills to pursue further studies in the management science domain
both locally and internationally.

WEEK TOPIC CLO PLO

Week 1 BASICS OF CAPITAL BUDGETING CLO 1 PLO 2,

Techniques of capital budgeting, i.e.Net present value, internal PLO 4,
rate of return, payback period, discounted payback period, PLO 8,
modified internal rate of return and profitability index. PLO 13.
Independent and mutually exclusive projects
Decision rules for capital budgeting techniques.
Week 2-3 PROJECT CASH FLOW ANALYSIS CLO 2 PLO 2,
Cash Flow Estimation, Relevant Cash Flows, Tax Effects, PLO 4,
Changes in Net Working Capital, Cash Flow Analysis, PLO 9,
Replacement Analysis , Estimation Bias, Evaluating Projects PLO 12,
with Unequal lives, Abandonment Value, Adjusting for PLO 11.
Inflation.
Week 4-5 RISK ANALYSIS AND OPTIMAL CAPITAL BUDGET CLO 3 PLO 2,
Introduction to Project Risk, stand Alone Risk, Abandonment PLO 4,
on NPV and Stand Alone Risk, Corporate Risk, Market Risk, PLO 6,
Risk and Capital, Risk Cash Outflows, View of Project Risk PLO 13.
Analysis, Optimal Capital Budget, Capital Rationing.
Week 6-7 LONG TERM FINANCIAL PLANNING CLO 4 PLO 2,
Strategic Plans, Operating plans, Sales Forecasts, Financial PLO 4,
Statement Forecasting, Formula Method for Forecasting AFN, PLO 6,
Forecasting Financial Ratios with Changes in Balance Sheet, PLO 13.
Forecasting Financial Statements Variables, Computerized
Financial Planning
Week 8-9 CAPITAL STRUCTURE CLO 5 PLO 2,
Business and Financial Risk, Capital Structure Theory, Target PLO 4,
Capital in Structure when Cash Flow are perpetuities, PLO 6,
Considerations and approaches in capital Structure Decisions. PLO 11.
Capital Structure Extensions
Capital Structure theory: MM Models, The Miller Model,
Criticisms of MM and Miller Models, Trade Off Models,
Asymmetries Information model, Variations in Capital
Structure, Book Weights vs. Market Weights.
Week 10-11 DIVIDEND POLICY CLO 6 PLO 2,
Dividends vs. Capital Gains: Investors Preference, Dividend PLO 4,
Policy in Practice, Changing Policies, Dividend Reinvestment PLO 12,
Plans, Influence on Dividend Policy, Stock Repurchases, Stock PLO 13.
Dividend Stock Splits, Tests of dividend Theories, Dividend
stability, Dividend policy in practice, Changing Policies,
Dividend Reinvestment Plans, Influence on Dividend Policy,
Stock Repurchases, Stock Dividend Stock Splits.
Week 12 LEASING CLO 7 PLO 2,
Types of Leases, Tax effects, Financial Statement effects, PLO 4,
Evaluation by the Lessee, Evaluation by the lesser, Other PLO 6,
Issues in Lease Analysis, Why Firms Lease. PLO 8,
 PLO 11,
PLO 13.
Week 13 WORKING CAPITAL MANAGEMENT CLO 8 PLO 2,
Cash Management, Receivable Management, Account Payable PLO 4,
and accruals Management, Inventory Management, Cash PLO 6,
Conversion Cycle PLO 8,
PLO 11,
PLO 13.
Week 14 Project Presentations CLO 9 PLO 2,
PLO 5,
PLO 8.
Week 15 Guest Speaker Session CLO 10 PLO 2,
PLO 5.

COURSETEXTBOOK
Financial Management (14th edition) by Eugene F. Brigham and Michael C. Ehrhardt.

REFERENCE TEXTBOOK
Fundamentals of Financial Management (15th edition) by Eugene F. Brigham and Joel F. Houston.

CASES STUDIES
Case studies will be given to students on a periodic basis to illustrate real-world applications of various
topics covered in this course.

GROUP PROJECT
Each project group should prepare a report analyzing the mutual funds, voluntary pension schemes and
wealth management plans provided by a prominent Asset Management Company (AMC) Pakistan. The
project must also be presented in class via a PowerPoint presentation.

COURSE ASSESSMENT

Quizzes/Assignments 10 marks

Class Participation 5 marks

Presentation 5 marks

Project 20 marks

Midterm Exam 25 marks

Final Exam 35 marks