Course Outline

AIR UNIVERSITY Multan Campus

Spring 2021
Faculty of Administrative Sciences
Department of Business Administration

Course Title: Financial Management

Class : BBA 4th Lab: (Not Required)
Credit Hrs : 3 Hours
Prerequisites For this Course: N/A

This Course is Prerequisite For: Financial Management

Instructor: Mr. Allah Ditta
e-mail: adm@aumc.edu.pk Address: Air University,Multan
Web: http://www.au.edu.pk
Office Hours: 0830-1630 hrs.
Tel: 061-4780091, Ext. 164
Text Book (s)  Principles of Managerial Finance, by Lawrence J. Gitman, Latest Edition
Reference Book(s)  Houston and Brigham, Financial Management, Theory and Practice, (Tenth
Learning Resources International Edition), Harcourt Brace College Publishers. 2004.
Other Resource(s)  Patrick, M., & French, N. (2016). The internal rate of return (IRR): projections,
benchmarks and pitfalls. Journal of Property Investment & Finance.
Course Description
This course is designed to develop the financial skills and logical thought processes necessaryto understand and discuss financial policy
decisions in a global economy.It covers the main concepts and decision tools of finance and their main businessapplications. Studentsare
expected to master the main financial decision tools applicable in capital budgeting, andto understand their usefulness and limitations. Also, to
comprehend the conceptual frameworksnecessary for understanding the impact of investment, financing and dividend policy decisions
onshareholder value, the valuation tools are used in various contextswith an integrative perspective on the various areas offinancial management.
Course Learning Objectives
At the end on this course the student will be able to understand:

1. Role of financial planning and control– financial forecasting and cash budgeting tools – in planning for the firm’s short term financial
requirements
2. Working capital and its components, applications of different techniques that managers can use to manage various aspects of working
capital – cash and liquidity, credit and receivables, inventories, etc.
3. Management of short term sources of financing
4. Long term financing –venture capital, equity, debentures etc.
5. Different theories of capital structure, their predictions about optimal capital structure and the limitations of using debt in the firms’
capital structure
Course Learning Outcomes
By the end of this course, you should be able to:
1. Evaluate capital investment decisions under uncertain economic conditions
2. Design an optimal capital structure for an organisation
3. Predict corporate failure
4. Apply derivatives in financial risk management
5. Apply financial management skills in the public sector
6. Ability to critically appreciate the use of financial statements and explain why free cash flow has such an important effect on firm value.
7. Explain what ratio analysis is and understanding of different uses of analytical techniques.
8. Explain how different amounts of current assets and current liabilities affect firms’ profitability and thus their stock prices.
9. Discuss optimal distribution policy and Describe Dividend Payment Procedures.
10. Understand and determine the optimal capital structure.
Class/Lecture Format
The course undertakes the following activities for achieving the objectives.
 Lectures
 Class discussions
 Problems solving
 Assignments
 Quizzes
 Presentations
 Individual and group learning activities/projects
 Examinations
 Case discussion
Each class will have a topic, specific tasks, and reading material set in advance. A class will typically involve a lecture/seminar – presenting a
new topic and related readings – followed by hands-on activities related to the topic for the week. Students will be expected to present or
discuss pre-specified reading material in the class. Please bring your printed preparation work to class because these may be collected in
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selected weeks.
Weekly Lecture Plan

Week Topic Activity

1. 1. Nature and Purpose of Financial Management Assignment 1

Introduction to financial management
Stakeholders theory
Conflicting stakeholders interests and corporate governance
Corporate social responsibility (CSR) and financial management
Ethical issues in financial management
Scope of Finance and its Career Opportunities
Alternative form of Business Organization
Finance in the organizational structure of the firm
Managerial Actions to Maximize Shareholders Wealth
Functions of a Finance Manager
2. 2. The Financial Environment: Markets, Institutions, and Interest Rates Quiz 1
The Financial Market
Financial Institutions
The Stock Market
The cost of Money
3. Cash-flow and financial planning Assignment 2
Firms’ operationg cashflow
Effect of depreciation on cash flow
Types of cashflow
Financial planning
Cash budget
Profroma financial statements

4&5 Capital Budgeting and Estimating Cash Flows Quiz 2

The Capital Budgeting Process: An Overview
Generating Investment Project Proposals, initial investment,
Estimating Project “After-Tax Incremental Operating Cash Flows, terminal
cashflow

6&7 Portfolio theory and analysis Assignment 3

Portfolio theory and risk reduction
Risk-return trade off, Mean-Variance Analysis
Capital Efficient Portfolios
Capital asset pricing model (CAPM)
Arbitrage Pricing Models (APT) and other multifactor models
Beta estimation
Portfolio performance measurement:
8 The cost of Capital Quiz 3
Introductionof the topic
Capital structure,
Cost of debt
Cost of common stock
Cost of preferred stock
Cost of retained earnings
Weighted average cost of capital
WACC and choosing iptimal capital structure
9 Mid term
1 Overview of Working Capital Management
0 Introduction
Working Capital Issues
Financing Current Assets: Short-Term and Long-Term Mix
Combining Liability Structure and Current Asset Decisions
11 Current Liabilities Management Assignment 4
Review accounts payable, the key
components of credit terms, and
the procedures for analyzing
those terms.
Understand the effects of
stretching accounts payable on
their cost and the use of accruals.
Interest rates and the basic types of unsecured bank
sources of short-term loans.
the basic features of

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 commercial paper and the key
aspects of international short-term
loans.
The characteristics of
secured short-term loans and the
use of accounts receivable as
short-term-loan collateral.
The various ways in
which inventory can be used as
short-term-loan collateral.
12 Capital Budgeting Techniques Quiz 4
Project Evaluation and Selection: Alternative Methods
Patyback period
Discounted payback period
Internal rate of return
Net present value
Profitability index
Potential Difficulties
Project Monitoring: Progress Reviews and Post-Completion Audits
13 Pay Out Policy
cash payout procedures, their tax treatment, and the role
of dividend
reinvestment plans.
The residual theory of dividends and the key arguments
with regard to dividend irrelevance and relevance.
key factors involved in establishing a dividend policy.
Review and evaluate the three basic types of dividend
policies.

14&15 Leverage and Capital structure: Quiz 5

leverage, capital structure, breakeven analysis, the
operating breakeven point, and the effect of changing
costs on the breakeven point.
Understand operating, financial, and total leverage and
the relationships among them.
The types of capital, external assessment of capital
structure.
The optimal capital Structure
The EBIT–EPS approach to capital structure.

16 Special topics in financing: Quiz 6

Hybrid and Derivatives Securities
Differentiate between hybrid and derivative securities and
their roles in the corporation.
The types of leases,leasing arrangements, the
leaseversus-purchase decision, the effects of leasing on
future financing, and the advantages
and disadvantages of leasing.
The types of convertible securities, their general features,
and financing with convertibles.
Final Term Examination

Class/Term/Semester Project/Assignment Outline

A minimum of three to four assignments, one presentation, and 6 quizzes will be conducted for sessional marks.

Grading and General Course Policies

Grades(The grade you earn during the semester will come from the following work.)
Mid-term 25 Marks (1.50 to 2 Hrs duration)
Project/Quizzes/Assignment/discipline 30 Marks
Final Exam 45 Marks (duration 3 Hrs)

Grading Criteria

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Letter Grade Percentage Marks GPA

Instructor Responsibilities
First, the lecturer is responsible for creating a learning environment that is stimulating and interesting, and that encourages collaboration, knowledge
sharing, and co-creation by all participants. The learning environment includes both the physical and virtual spaces where learning and teaching
activities take place. The aim is to develop an atmosphere of cooperation and a spirit of learning, inquiring, and innovating in all activities
underpinned by a sense of responsibility for our individual and collective learning.
Student Responsibilities /Requirements
Students as active participants are expected to take responsibility for their individual and collective learning. While this course is designed to foster
students’ active participation and contribution to knowledge co-creation, this will not happen unless students take seriously their roles and
responsibilities. As active contributors’ students are expected to be prepared for each class and take an active role in discussions and other learning
activities. Students must ensure their
 Timeliness in the class
 Professional/prescribed dress code
 Attendance
Eating, sleeping, reading, texting, listening to or working on unrelated materials, sidebar conversations, or “multi‐tasking” using a computer or other
electronic device is not permitted. Laptops (and similar devices) may be used in class for course-related activities such as taking notes. Students may
bring drinks such as water.
I am always willing to see my students and will go out of my way to schedule meetings. Please make sure that if you make an appointment that you
keep it. Finally, as will quickly become apparent, e-mail is by far the easiest and most reliable method to reach me.
Other Requirements
In terms of performance in this class, I have very high expectations and anticipate outstanding work from each of you. I hope for a very positive
experience for us all. Keep in mind that if you do not deliver outstanding work then you will be graded to reflect this. I ask that you contact me
directly and immediately if you ever have any questions or concerns regarding the class, and assignments, or your grade(s). I am always willing to
help.
I do ask that all students be respectful and courteous to other class members as well as the professor. This includes turning off cell phones and other
electronic devices before class begins and arriving to class on time, as walking in late is disruptive to other classmates and the professor. Those who
walk in late will likely not receive attendance credit for that day.
Academic Integrity
Integrity is a cornerstone of academia and permeates every aspect of academic discipline. AU Instruction 36-2609, Academic Integrity defines
academic integrity as “uncompromising adherence to a code of ethics, morality, conduct, scholarship, and other values related to academic activity.”
Every student enrolled in the university is responsible for adhering to this standard. Students are warned that having knowledge of a violation and
failing to report it is also a violation of academic integrity.
Students found guilty of academic integrity violations are subject to sanctions imposed by AU. These sanctions can affect student credit for
completed work as well as a student’s eligibility for academic opportunities. Collaboration and discussion in the online environment among students
in the same seminar are highly encouraged, but each student is expected to do his/her work. It is a breach of integrity to use, receive, or give work to
another student outside of the work course.
Original Work
Student work submitted for a grade must be composed solely by the student (or identified group of students for a group assignment) except where
documented following citation requirements, and it must be composed
specifically for the current assignment. No work previously submitted in any course, or elsewhere, will be resubmitted or reformatted, in whole or in
part, for submission in a current assignment without the prior written approval of the course instructor. Additionally, students are prohibited from
using the work of other students (current or former) in any way, including the formulation of ideas or outlines, to complete assignments. The act of
appropriating, or stealing, the literary composition of another, or parts or passages of another’s writings, ideas, or language, and passing them off as
one’s
work constitutes plagiarism. Every student must ensure quotations or paraphrased passages are properly cited within any written work submitted.
Cheating
The act of giving or receiving improper assistance such as, but not limited to:
- Uploading and/or downloading study aids or notes (also known as “dirty purples,” “gouge,” or “the pony”) to or from websites; or
providing or receiving such notes via any other method
- Copying material from another’s assessment(test/paper/etc.)
- Using notes and issued materials, or other references not authorized for use during an assessment, or other assigned work.
- Knowingly permitting another to copy work or presentation materials, or excerpts/ideas/answers from an assessment.
- Collaborating with other persons on individual assignments, except as permitted
- Sharing study materials or any assessment information after completing an assessment. This is to preserve the integrity of the assessment
and ensure that all students have an equal opportunity at success in the program.
Cheating is a violation of academic integrity standards. Individuals who violate the academic integrity policy are subject to adverse administrative
and or disciplinary actions as described in AUI 36-2602.

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