SBM-NMIMS: COURSE TEACHING PLAN

Assurance of Learning AOL Specific

Course
Code
Course
Financial Management
Title
Course Prof. Samveg Patel
Instructor/s
Credit
3 credits / 20 sessions
Value
Programme
& MBA HR, Year - I, Trim - III
Trimester
Pre-requisite

Course Learning objectives

1) Understand the major Corporate Finance decisions and financial objective
of the firm. (PLO 2b)
Learning
2) Evaluate capital budgeting proposals and various capital structures. (PLO
Objectives
2b)
3) Integrate various corporate finance decision areas to achieve the financial
objective of the firm. (PLO 3b)
1. Describe the major corporate finance decision making areas and different
Learning financial goals of the organization.
Outcomes 2. Describe the importance of working capital management.
(Must be
3. Solve the Time Value of Money Problems.
connected to
Learning 4. Understand capital budgeting, capital structure, working capital
Objectives) management and dividend decision as four major decisions of corporate
finance.
This course equips participants with the fundamental knowledge of corporate
Course finance. It focuses on four major corporate finance decisions like capital
Description budgeting, capital structure decision, working capital management and dividend
decision. It helps students to understand the time value of money concept.
Specific % AOL Instruments
assessment Weightage
methods /
tasks
CLO 1 CLO 2 CLO 3
Class
Evaluation participation 20 Marks
Pattern
Class test 1 20 Marks Embedded questions 20
Quiz 20 Marks Embedded questions 20
Final 40 Marks Embedded questions 10 10 20
Examination

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 *AOL Assessment Instruments:

 Embedded Questions: Quiz, Class Test, Midterm Examination, Final Examination

 Rubrics: Case & Article Discussion, Individual Assignment

Group Projects & Viva’s, Case Problem analysis, Oral and written
communication presentations, Role Play,
Group Presentation, Group Project etc.

Topics / Sub -topics Chapter detail Details of pedagogy adopted for

Sessions / Article Reference / Case class engagement –
Studies Learning Outcomes
session wise
Introduction to Reading: Chapter 1 (RWJ) : Class Discussion
Corporate Finance: Introduction to Corporate To understand the different
Revision of Corporate Finance (Pg 1-21) financial and non financial
Balance sheet and objectives of firms. To explain
Setting business objectives
1 relevant decision areas; pros and cons of profit /
and measuring performance
Objectives- profit accounting based measures.
( Doyle, 1994)
maximization Vs
To describe financial objective
Shareholder wealth
of the firm.
maximization

Working Capital Reading: Chapter 26 (RWJ) : Class Discussion

Management : Working Short-Term Finance and
capital planning, To explain various sources of
Planning, (Pg. 891-914)
Operating and cash short term financing.
cycle
To understand the importance
2
of WCM in value addition of
the firm. Calculate and
Compare the Working Capital
cycle of different companies /
Industries.

Working Capital Chapter 27 (RWJ) : Cash Problem Solving

Management : Management (Pg. 926-944)
Chapter 28 (RWJ) : Credit To solve the problem to
Receivables
and Inventory Management identify the optimum level of
management, Cash
(Pg. 951-980) cash holdings.
3 management &
budgeting
Does trade credit substitute
bank credit? Evidence from
firm‐level data (G Blasio,
2005)

Working Capital Chapter 28 (RWJ) : Credit Class Discussion

Financing – Sources of and Inventory Management To understand the importance
4 Finance, Maximum (Pg. 951-980) of bank credit and trade credit
Permissible Bank
and their dynamics with
Finance
inventory.

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 Long term decisions – Reading: Chapter 4 (RWJ) : Problem Solving
Time Value of money Discounted Cash Flow To learn the application of
Valuations time value of money in
personal and corporate finance
Finance Reading: Time decisions, preparation of Loan
5
Value of Money amortization schedule,
(Timothy A. Luehrman, Retirement planning
and Annuity business
2015)
cashflows.

Valuation of Bonds Reading: Chapter 8 (RWJ) : Problem Solving

Interest Rates and Bond To understand the framework
Valuation(Pg. 266-297) for valuation of bond.
Corporate bond valuation
6 and the term structure of To solve the problem of
credit spreads finding value of the bond and
(R Litterman and T Iben, YTM.
1991)
Valuation of Stocks Reading: Chapter 9 (RWJ) : Problem Solving
Stock Valuation(Pg. 305- Understand the framework for
332) valuation of equity.

A synthesis of equity Solve the problem of finding

7 valuation techniques and value of the equity using
the terminal value dividend discount model.
calculation for the dividend
discount model
(SH Penman, 1998)
Long term Decision - Readings: Chapter 5 (RWJ): Class Discussion and Problem
Investment in long term Net Present Value and Solving
assets - An introduction Other Investment Rules (Pg.
159-183) To learn the capital budgeting
to discounting and non-
Chapter 6 (RWJ): Making tools and their application in
discounting methods
Capital Investment project appraisal and their
8 (PB, ARR, NPV, IRR, PI,
Decisions (Pg. 195-220) pros and cons.
MIRR), Identification
and computation of The arithmetic of capital-
relevant incremental budgeting decisions
cash flows
(E Solomon, 1956)

Comparing NPV & IRR Chapter 6 (RWJ): Making Class Discussion & Problem
methods, assumptions Capital Investment Solving
& issues Decisions (Pg. 195-220)
9 To explain the conflict of
ranking in evaluation of
project and which one to
choose in this situation.

10 Evaluation of Mutually Reading: Chapter 6 (RWJ): Class Discussion & Problem

Exclusive Projects Making Capital Investment Solving

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 Project of Unequal Decisions To solve the problem of capital
Lengths, Optimum budgeting in mutually
Replacement Cycle exclusive and unequal length
Decisions situations.

Capital Budgeting Reading: Chapter 6 (RWJ): Class Discussion & Problem

under Risk Making Capital Investment Solving
Overview of capital Decisions
budgeting methods To forecast the project cash
11 under risk and Capital budgeting methods flow and analyse the value of
uncertainty and risk: A further analysis the project under different risk
scenario
(LD Schall, GL Sundem,
1980)

Cost of Capital: CAPM, Reading: Chapter 13 (RWJ): Class Discussion

leveraged beta Risk, Cost of Capital, and To explain the concept of
12 Valuation CAPM and Systematic risk.
(Pg. 447-476) Calculate WACC and
components of WACC.

Cost of Capital: The capital asset pricing Class Discussion & Problem
Weighted average cost model: a “multi-beta” Solving
of capital interpretation
13 (WF Sharpe, 1977) To describe WACC,
An intertemporal capital calculation of BETA, Cost of
asset pricing model (R C Debt and Cost of Equity.
Merton, 1973)

Capital Structure Reading: Chapter 16 (RWJ): To understand the capital

Decisions Capital Structure- Basic structure of the company.
Capital structure Concepts Discuss the various theories of
14 theory- Irrelevance capital structure and
theory, static trade-off The Modigliani-Miller conflicting literature.
propositions after thirty
years
(MH Miller, 1988)
Capital Structure Chapter 17 (RWJ): Class Discussion & Problem
Decisions Solving
Capital structure Capital structure- Limits to To calculate optimum capital
theory- Irrelevance the Use of Debt structure and cost of capital
15
theory, static trade-off, under different capital
agency costs, pecking Still searching for optimal structures.
order hypothesis capital structure
(SC Myers, 1993)

Leverage- operating, Class Discussion & Problem

financial, total; EBIT – Solving
16 EPS analysis; To calculate indifference point
indifference point and effect of change in
leverage on value of the firm.

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 Long term sources of Reading: Chapter 15 Class Discussion
finance – Different (RWJ): Long-Term
17 forms of debt, equity Financing: An To understand various sources
and hybrid of long term financing and
Introduction Chapter 20
instruments their cost structure.
(RWJ): Raising capital

Dividend decision and Reading: Chapter 19 (RWJ) Problem Solving

payout policy- cash : Dividends and Other To understand the various
dividends, stock Payouts form of distributing profits
18
repurchase, split and their pros and cons.
The determinants of
corporate dividend policy
(M Myers, F Bacon, 2004)
Dividend decision and Reading: Chapter 19 (RWJ) Class Discussion and Problem
payout policy- cash : Dividends and Other Solving
19
dividends, stock Payouts To solve the problem of
repurchase, split - expected dividend Payout
Continue using Lintner model.
Revision Concluding session for Class Discussion
revision
To revisit the important
20 concepts learned in corporate
finance course and its
application in upcoming
courses.

Reading
List and Textbook :
References Ross, S.A., Westerfield, R. W., Jaffe, J., Kakani, R. K. (2020). Corporate Finance 11th
Edition. McGraw Hill Education
(along with
details of Reference:
year of
Publication)
Brealey, R. A. & Myers, S. C. (2020) Principles of Corporate Finance 12th Edition, Mc
Graw Hill

Prepared by Faculty Team Area & Program chairpersons

Faculty Chair AOL Approved by Dean SBM

Approved by Associate Deans

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