Principles of Finance - Syllabus
Paper Code: 212503
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Marks : 100
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Credits : 4
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Class Hours : 60
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Paper Title:
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PRINCIPLES OF
FINANCE
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1. Introduction: Conceptual framework, Financial Decision making, Role
of Finance in a firm. Goal of financial management of a firm, Finance as a
discipline.
2. Short Term Financing: Characteristics
and sources, spontaneous sources, unsecured and secured short term loan,
Assignment and factoring of accounts receivables and inventory financing.
3. Intermediate Term Financing:
Characteristics and sources, different methods, repayment method and effective
interest calculation.
4. Time value of Money: Basic concepts, computing present value
and future value: Single amounts-Annuities-Mixed streams.
5. Long Term Financing: Characteristics and uses, Common stock
capital, Preferred Stock Capital and Bond, Valuation of Stock and Bond.
6. Risk and Return: Risk
and Return fundamentals, Measuring risk; Probability distribution, Expected
value, Standard deviation and co-efficient of variation. Risk premium, Risk and
required rate of return, CAPM. Leverage and Risk-Financial Risk, Business Risk.
7. Capital Budgeting Cash Flows: The Capital Budgeting Decision
Process-The relevant cash flows, finding initial investment, finding the
operating cash inflows, finding the terminal cash flow, summarizing the
relevant cash flows.
8. Capital Budgeting Techniques: Overview of capital budgeting
techniques-Pay Back Period, Net Present Value (NPV), Internal Rate of Return
(IRR), Comparing NPV and IRR.
9. Capital Structure Decision:
The firm’s capital structure-The EBIT-EPS approach to capital structure, choosing
the Optimal Capital Structure.
Book Recommended:
1. Gitman
Lawrence J : Principles of Managerial Finance, 10th
edition
Reference
Book:
1. Brigham eugene F, Ehrhardt : Financial
Management Theory and Practice,
Michael C, 11th
edition, South-Western
2. Lawrence D, Schall & Charls : Introduction
to Financial Management
W. Haley