Course Outline: Financial Management II

Course code: Click or tap here to enter text.

Credit: 3, Core
Area: Finance and Accounting
Program: PGDM
Term III, Academic Year 2024-26
_______________________________________________________________________
Instructor(s) Dr. Roshni Garg Prof. Tarun Kehair Prof. Ankur Kulshreshtha
Name
Room no. Click or tap here to Click or tap here to enter
enter text. text.
Email [email protected] [email protected] [email protected]
Phone (Extn Click or tap here to
no.) enter text.
Meeting Any day with a prior Any day with a prior Any day with a prior
Hours appointment appointment appointment
______________________________________________________________________

1. COURSE DESCRIPTION

The Financial Management II course covers the concepts, and theories of capital structure and
dividend policy decisions. Further, it course delves deeper into component-wise issues related to
working capital management. In addition, the course covers the concept of leasing as an
alternative source of financing. The purpose is to make the students understand the practical
applicability of various financial decisions covered in the course.

2. COURSE OUTCOMES (COs)

After going through the course, the students would be able to:

Course Outcome 1 (CO1): Analyze a firm's capital structure.

Course Outcome 2 (CO2): Evaluate different methods of rewarding the shareholders.
Course Outcome 3 (CO3):
Analysing various components in working capital management decisions.
Course Outcome 4 (CO4): Evaluate leasing decisions in a firm.

1
3. MAPPING OF THE PROGRAM OUTCOMES (POs) & COURSE OUTCOME (COs)

Course Outcomes (COs)

Program Outcomes (POs)
CO1 CO2 CO3 CO4
PO1: Student should be able to write well
organized and grammatically correct business
reports and letters.
PO2: Student should be able to make effective oral
presentations.
PO3: Student should be able to demonstrate
critical thinking skills by understanding the issues,
evaluating alternatives on the basis of multiple 3 3 3 3
perspectives and presenting a solution including
conclusions and implications.
PO4: Student should be able to demonstrate
problem solving skills by understanding and
defining the problem, analyzing it and solving it by 3 3 3 3
applying appropriate theories, tools and techniques
from various functional areas of management.
PO5: Student should be able to illustrate the role
of responsible leadership in management.
PO6: Student should be able to identify social
concerns and ethical issues in management.
PO7: Student should be able to identify challenges
faced by the organization at the global level.
PO8: Student should be able to take decisions in
the global business environment.

4. PEDAGOGY

The pedagogy for this course will be a judicious mix of lectures, problem-solving, and case analysis. Active part

2
5. COURSE EVALUATION COMPONENTS (CECs)

1. Class participation (5%): Students will be evaluated for their active contribution to class
preparation based on the prerequisite readings, case discussions, class contribution, and
overall conduct in every class.
2. Quizzes (20%): There will be n number of quizzes, and the best of n-1 will be considered for
final evaluation. The quizzes could be announced or unannounced. Therefore, keeping pace
with the course covered will be necessary.
3. Group Assignments (15%): Each group is expected to work on assignments allocated by
the instructor after completing a particular module. The assignments will entail
understanding and analysis of important financial decisions across various industries
allocated to the groups.
4. Mid-term (30%): The mid-term exam will include all the topics covered till midterm. The
exam will assess subject understanding by applying concepts to analyze real-life business
situations.
5. End-term (30%): The end-term exam will include all the topics covered during post-mid-
term sessions. The exam will assess subject understanding by applying concepts to analyze
real-life business situations.

6. MAPPING BETWEEN COs, POs, and CECs

Course Evaluation Components (CECs)

Class Quiz Assignments Mid-term End-term
COs POs
participatio
n
PO3
CO1 ✓ ✓ ✓ ✓
PO4
PO3 ✓
CO2 ✓ ✓ ✓
PO4
PO3
CO3 ✓ ✓ ✓ ✓
PO4
PO3
CO4 ✓ ✓
PO4

7. RESOURCES

7.1 Textbook

Contemporary Financial Management, R. Charles Moyer, James R. McGuigan and

Ramesh P. Rao, 14th edition, Cengage, 2018.

3
 7.2 Reference Books

 Financial Management and Policy, J. C. Van Horne and S. Dhamija, 12th edition,
Pearson, 2019.
 Financial Management: Theory and Practice, E. F. Brigham and M. C. Ehrhardt, 14 th
edition, Cengage Learning, 2015.
 Corporate Finance, Stephen A Ross, R. W. Westerfield, J. Jeffe, B. D. Jordan, R. K.
Kakani, 11th edition, McGraw Hill, 2018.
 Financial Management: Text, Problems and Cases, M. Y. Khan and P. K. Jain, 8 th edition,
McGraw Hill, 2019.
 Principles of Corporate Finance: R. A. Brealey, S. C. Myers, F. Allen, P. Mohanty, 12 th
edition, McGraw Hill, 2019.

7.3 Online References (if any)

 Corporate websites for annual reports

 moneycontrol.com
 in.finance.yahoo.com

8. SESSION PLAN

Session Topic Chapter/ ESG

No. Readings

1 Capital Structure Chapter 13

Concepts
 Capital structure https://www.coursera.org/learn/corporate-
decisions and finance-essentials-ii#modules
maximization of Module – 5
shareholders’ wealth
 Business risk and
financial risk

2 Capital Structure Chapter 13 

Theories
 Capital structure
without income tax
 Capital structure with
income tax
 Capital structure:
Financial distress

4
 costs and agency
costs
 Value maximizing
capital structure
 Cost of capital and
optimal capital
structure

3 Capital Structure and Chapter 14

Leverage
 Operating and
financial leverage
 Effect of leverage on
shareholders' wealth
and cost of capital

4 Capital Structure Chapter 14

Decisions
 EBIT-EPS Analysis
 Capital structure
decision and
corporate governance

5 Capital Structure Chapter 14

Decisions
 Case discussion HBP Case
(#5-292-050): Continental Carriers Inc.

6 Dividend Decisions Chapter 15

 Determinants of
dividend policy https://www.coursera.org/learn/corporate-
finance-essentials-ii#modules
Module – 6

7 Dividend Decisions Chapter 15

 Dividend policy and
firm value Ivey Note (#W18603):
 Dividend policies in
A Note on Dividend Policy
practice
o Stable dividend
policy
o Residual dividend
policy
o Other policies
5
8 Dividend Decisions Chapter 15
 Stock dividends and
stock splits The Case Center Case (#144-081-1):
 Share repurchase Dividend Policy of Infosys Limited: To pay
 Dividend policies of or not to pay, that is the question
selected Indian
companies

9 Dividend Decisions Chapter 15

 Dividend decision
and corporate The Case Center Case (#144-081-1):
governance Dividend Policy of Infosys Limited: To pay
 Case discussion or not to pay, that is the question

10 Working Capital Chapter 16

Introduction Pg 574 – 589
 Importance of Class exercise
working capital
 Operating cycle https://www.coursera.org/learn/operational-
analysis finance#modules
Module – 3

11 Estimating Working Class exercise

Capital Requirements

12 Receivable Chapter 18
Management Class Exercises
 Credit terms Pg 660 – 673
 Cost-benefit analysis
Darden Note (#UV8022):
Trade Credit

Caselet:
Adidas India Ltd.

13 Receivable Chapter 18
Management Class Exercises
 Credit policies Pg 660 – 673
 Collection policy
Darden Note (#UV8022):
Trade Credit

Caselet:

6
 Adidas India Ltd.

14 Inventory Management Chapter 18

 Objectives of Pg 673 – 683
inventory
management Caselet:
 Analysis of Indus Engineering Limited
investment in
inventory

15 Cash Management Chapter 17

 Need for cash
management HBR Article (#R0905E):
 Cash budget Need Cash? Look inside your company

16 Cash Management Chapter 17

 Managing cash
collection and HBR Article (#R0905E):
disbursement Need Cash? Look inside your company
 Investment of surplus
cash in marketable
securities

17 Working Capital Chapter 16

Financing Pg 589 – 609
 Trade credit/ Bank
credit as a source of HBS Note (#93K009):
working capital A Note on Financing Alternatives
finance
 Commercial paper
 Factoring

18 Working Capital HBP Case (#9-201-029):

Management Decision Dell’s Working Capital
 Case discussion

19 Alternate Source of Chapter 19

Financing: Lease Class exercise
Finance
 Introduction to leasing
 Types of lease
arrangements

7
20 Alternate Source of Chapter 19
Financing: Lease Class exercise
Finance
 Deciding minimum
lease rentals
 Analysis of lease
versus buy/borrow

ACADEMIC INTEGRITY & CLASS RULES

a) Plagiarism is the use of or presentation of ideas, works that are not one’s own and which
are not common knowledge without granting credit to the originator. Plagiarism is
unacceptable in IMI and will invite a penalty. The type and extent of the penalty will be
at the discretion of the concerned faculty.

b) Cheating means using written, verbal or electronic sources of aid during an examination/
quiz/ assignment or providing such assistance to other students (except in cases where it
is expressly permitted by the faculty). It also includes providing false data or references/a
list of sources that either do not exist or have not been used, having another individual
write your paper or assignment, or purchasing a paper for one’s own submission.
Cheating is strictly prohibited at IMI and will invite penalty as per policies of the
Institute.