SBM-NMIMS: COURSE TEACHING PLAN

Assurance of Learning AOL Specific

Course Code

Course Title Corporate Finance

Course Dr. Chandan Dasgupta, Dr. Mayank Joshipura, Dr. Sachin Mathur, Dr.
Instructor/s Sangeeta Wats, Dr. Smita Mazumdar, Prof Sudhanshu Pani
Credit Value 3
Programme &
FTMBA, Trimester III
Trimester
Financial and Management Accounting, Financial Statement Analysis,
Pre-requisite
Value Risk and Capital Markets.

CLO 1) Estimating working capital requirements, evaluating trade-offs in working

capital management decisions and comparing financing alternatives.
(PLO 2a)
Learning
CLO 2) Applying capital budgeting techniques, estimating relevant cash flows and
Objectives
cost of capital, and analysing risks, to support firm’s long term
investment decisions. (PLO 3b)
CLO 3) Applying the capital structure and dividend payout theories and alternative
methods of firm valuation. (PLO 2b)
After completion of the course, students would be able to:
1. Evaluate the working capital requirements for firms with growing, seasonal or
cyclical cash flows; analyze credit policy decisions and assess alternative
sources of working capital financing.
2. Evaluate capital budgeting proposals by identifying relevant cash flows and
Learning
using a set of objective investment criteria.
Outcomes
3. Understand the various capital structure theories and determine which capital
structure is best suited for a firm.
4. Assess the implications of dividend and share repurchase policies for
shareholders.
5. Learn the alternative methods for determining the value a company.
This course builds upon the concepts learnt in the basic finance courses learnt in
the first two terms to cover key corporate finance decisions. The course aims to
Course provide participants with tools to evaluate working capital management and
Description financing decisions as well as capital budgeting decisions. It covers theories and
concepts related to capital structure, dividend and share repurchase decisions, and
the frameworks of corporate valuation using various valuation techniques.
Specific assessment 1.5 AOL CLO 1 CLO 2 CLO 3
methods Credit Instruments
Class participation 10 N.A.
Quiz (Polls on Cases/ 20 N..A.
Pre-reads)
Evaluation
Group Assignment 30 Rubrics 20 10
Pattern
(Case-based, time-
bound, with viva)
Final Exam 40 Embedded
15 25
questions
100 20 25 25

1|Page
 Topics / Sub -topics Chapter detail Details of pedagogy
Learning Outcome if / Article Reference / adopted for class
Sessions
provided session Case Studies engagement - Class
wise Exercises etc.
Module 1: Reading: Chapter 29 Class Exercises and Case
Working Capital: (BM): Financial Discussion
Planning, Planning (Pg. 785-798)
Management & LO: Analyzing the
Financing Decisions company's performance,
1
Working capital Case: Toy World Inc. forecast fund needs.
requirements in a firm (HBS 9-295-073)
with seasonal sales

Case: Toy World Inc. Case Discussion and

Estimating seasonal (contd.) (HBS 9-295- Problem Solving
changes in working 073)
capital requirements, LO: Analysing the pattern of
analyzing the current assets and cash flows
2
implications of in a seasonal company
seasonal versus level Using pro forma financial
production decision. forecasts to estimate fund
needs under alternate
production methods
Working capital Case: Butler Lumber Case Discussion and
requirements in a Company Problem Solving
growing firm (HBS 9-292-013)
LO: Determining the reasons
3 for the rising bank
borrowing, and forecasting
borrowing requirements
Trade-off between growth,
profitability and liquidity
Working capital credit Case: Multitech Ltd. Case Discussion and
policy Problem Solving
Reading: Chapter 30
Evaluating trade-offs (BM): Working Capital LO: Impact of changes in
4 between sales Management (Pg.816- working capital credit policy
volume, credit period, 822)
cash discounts and
collections

Fund-based and non- PPT on working capital Lecture and Class Exercises
fund based facilities financing
for domestic business, Problem set on Working LO:
export and import. capital financing Maximum Permissible Bank
Finance
Fund-based facilities: Cash
5
credit
Non-fund based facilities:
Letters of credit, Bank
guarantees
Working capital facilities for
export and import
2|Page
 GST and its impact on Guest Session (Webinar)
working capital
LO: Basics of GST
Key concepts: Value-added
tax, input credit
6 Benefits of GST
Impact on working capital
requirement
Effect on cash flows & fund
requirements

Working capital Case: Noble Group Case Discussion

financing in global (HBS 9-210-021)
context LO: Role of trade finance in
7 facilitating the business
Ways to mitigate risks in
international trade

Module 2: Case: Nike Cost of Case Discussion and

Capital Budgeting Capital Problem Solving
Decisions (UV0010)
LO: Estimating the weighted
Leveraged & Reading: Chapter 9 average cost of capital of a
8
Unleveraged beta, (BM): Risk and the Cost company
WACC of Capital (Pg. 231-240) To identify and explain the
mistakes in WACC
estimation.

Capital investment Case: Investment Case Discussion and

decisions: Investment Analysis and Lockheed Problem Solving
Criteria Tristar
NPV, IRR, Payback (HBS 9-291-031) LO: Making capital
period, Accounting investment using various
9
rate of return Reading: Chapter 5 decision criteria.
(BM): Net Present Value Link between positive NPV
and Other Investment projects, and value added to
Criteria (Pg.109-126) the shareholders.

Capital investment Case: Investment LO: The adverse effect of a

decisions: Investment Analysis and Lockheed negative NPV project on
10
Criteria Tristar (contd.) shareholder value.
(HBS 9-291-031) Concept of sunk costs
Estimating relevant Case: Modern Pharma Case Discussion and
cash flows Problem Solving
Reading: Chapter 6
Impact of tax shield, (BM): Making LO: Estimating operating
capex, working Investment Decisions after tax cash flows
11 capital, salvage value with the Net Present including depreciation tax
Value Rule (Pg. 137- shield
156) Estimating net cash flows
incorporating capex, net
working capital & salvage
value
3|Page
 Overhead cost allocation
Effect of product
cannibalization
Capital investment Case: Phuket Beach Case Discussion and
decisions for Hotel (HKU145) Problem Solving
mutually exclusive
projects LO: Identifying relevant
cash flows
12
Impact of various evaluation
criteria on the decision
making,
Sensitivity analysis &
Scenario analysis
Capital investment Case: New Heritage Case Discussion and
decisions for Doll Problem Solving
alternative projects Company
under capital (HBS 9-291-031) LO: Capital budgeting
rationing decision-making process in a
firm
13
Identifying relevant cash
flows and discount rate
Applying decision criteria
under capital rationing
Risk analysis

Real Option in capital Case: Southern Case Discussion and

budgeting decision Airways Problem Solving

LO: Determining the value

14
of the option to expand or
abandon the project on the
basis of the decision tree
analysis
Module 3: Reading: Chapter 17 Lecture and Class
Capital Structure, (BM): Does Debt Policy Discussion
Dividend Theory & Matter? (Pg. 453-470)
Firm Valuation LO: Implications of
Modigliani and Reading: Chapter 18 alternative capital structure
Miller’s irrelevance (BM): How Much theories
theory Should a Corporation
15
Static trade-off: Tax Borrow? (Pg. 478-503)
shield benefit versus
cost of financial
distress
Agency costs
Pecking order
hypothesis
Dividend decision and Reading: Chapter 16 Lecture and Class
payout policy (BM): Payout Policy Discussion
Cash dividends versus (Pg. 425-437)
16
stock dividends and LO: Different forms of
splits payout
Dividend policy
4|Page
 Impact of payout on firm
value
Share repurchases Case: Blaine Case Discussion and
Kitchenware, Inc.: Problem Solving
Capital Structure
(HBS 4040) LO: Applying capital
structure theory and
assessing a share repurchase
decision
17 Determine the optimal debt
capacity and capital
structure, and subsequently
estimate the resulting change
in firm value and stock price
and the impact of the value
of interest tax shields

Valuation of Firm: Case: Sampa Video, Case Discussion

Inc. (HBS 201 094)
LO: To discuss basics of
Reading: Chapter 19 firm valuation and
18
(BM): Financing and assumptions underlying
valuation (Pg. 510-530) alternative methods

Valuation of Firm Case: Sampa Video, Case Discussion and

Inc. (contd.) Problem Solving

19 LO: To illustrate estimation

of value using APV, WACC
and CCF methods

Raising long term Reading: Chapter 15 Lecture and Class

funds from capital (BM): How Corporations Discussion
markets Issue Securities (Pg.
392-415) LO: Role of financial
markets: resource allocation,
20
price discovery
Raising funds from financial
markets: by lifecycle stage
of firm

Reading Text book

List and Brealey, R.A., Myers, S. C., Allen F., Mohanty, P. (2018). Principles of Corporate
References Finance. 12th Edition. McGraw Hill Education India (BM)

Reference Books:
Chandra, Prasanna. (2019). Financial Management: Theory and Practice. 10th
Edition. McGraw Hill Education India (PC)

5|Page
 Prepared by Faculty Team Area & Program chairpersons

Faculty Chair AOL Approved by Dean SBM

Approved by Associate Deans

Rubrics for Group Assignment (Submission and Viva)

Exemplary Satisfactory Unsatisfactory
Analysis of Working Accurate analysis Mostly accurate Incorrect analysis
Capital Requirement and ability to explain analysis and basic and lack of basic
CLO 1 (20 marks) the rationale for the understanding of understanding;
analysis of working working capital delayed submission,
capital requirement management or submission with
high similarity index
Assessment of Cost Accurate analysis Mostly accurate Incorrect analysis
of Capital and ability to explain analysis and basic and lack of basic
CLO 2 (10 marks) the rationale for the understanding of understanding;
assessment of cost of cost of capital delayed submission,
capital or submission with
high similarity index

6|Page