LECTURE NOTES
ON
FINANCIAL MANAGEMENT
MBA I YEAR II SEMESTER
(JNTUA-R15)
Mr. P. PRATHAP KUMAR
ASST.PROFESSOR
DEPARTMENT OF MANAGEMENT STUDIES
CHADALAWADA RAMANAMMA ENGINEERING COLLEGE
CHADALAWADA NAGAR, RENIGUNTA ROAD, TIRUPATI (A.P) - 51750
CREC, Dept of MBA Page 1
, JAWAHARLAL NEHRU TECHNOLOGIAL UNIVERSITY ANANTAPUR
MBA Semester – II Th C
44
(14E00204) FINANCIAL MANAGEMENT
The objective of the course is to provide the necessary basic tools for the students so as
to
Manage the finance function. The students should be able to understand the management
of the
Financing of working capital needs and the long term capital needs of the business
organization
* Standard Discounting Table and Annuity tables shall be allowed in the
Examination
1. The Finance function: Nature and Scope. Importance of finance function – The new
Role in the contemporary scenario – Goals of finance function; Profit Vs Wealth Vs
Welfare; –Wealth maximization and Risk-Return trade off.
2. The Investment Decision: Investment decision process – Project generation, project
Evaluation, project selection and project implementation. Developing Cash Flow Data.
Using Evaluation Techniques – Traditional and DCF methods. The NPV Vs IRR
Debate.
3. The financing Decision: Sources of finance – a brief survey of financial instruments.
The capital structure decision in practice: EBIT-EPS analysis. Cost of capital: The
Concept – Average Vs Marginal cost of Capital. Measurement of cost of capital –
Component Costs and Weighted Average Cost. The Dividend Decision: Major forms of
Dividends
4. Introduction to working capital: Concepts and characteristics of working capital,
Factors determining the working capital. Estimation of working capital requirements.
Current Assets Management: Management of current assets – Cash, Receivables and
Inventory. Cash budget, Credit terms – Financing current assets
5. Corporate Restructures: Corporate Mergers and acquisitions and take-over’s-Types
of
Mergers, motives for mergers, Principles of corporate governance.
References
Financial management –V.K.Bhalla ,S.Chand
Financial Management, I.M. Pandey, Vikas Publishers.
Financial Management--Text and Problems, MY Khan and PK Jain, Tata
McGraw- Hill,
Financial Management, Dr.V.R.Palanivelu, S.Chand
Principles of Corporate Finance, Richard A Brealey etal. Tata McGraw Hill.
Fundamentals of Financial Management, Chandra Bose D, PHI
Financial Management, William R.Lasheir, Cengage.
Financial Management – Text and cases, Bingham & Earhart, Cengage.
Case Studies in Finance, Bruner.R.F, Tata McGraw Hill, New Delhi.
Financial management, Dr.M.K.Rastogi, Laxmi Publications
CREC, Dept of MBA Page 2
, UNIT-I
CREC, Dept of MBA Page 3
, THE FINANCE FUNCTION
INTRODUCTION:
In our present day economy, Finance is defined as the provision of money at the
time when it is required. Every enterprise, whether big, medium or small needs finance
to carry on its operations and to achieve its targets. In fact, finance is so indispensable
today that it is rightly said to be the life blood of an enterprise.
MEANING OF FINANCE
Finance may be defined as the art and science of managing money. It includes financial
service and financial instruments. Finance also is referred as the provision of money at
the time when it is needed. Finance function is the procurement of funds and their
effective utilization in business concerns. The concept of finance includes capital, funds,
money, and amount. But each word is having unique meaning. Studying and
understanding the concept of finance become an important part of the business concern
TYPES OF FINANCE
Finance is one of the important and integral part of business concerns, hence, it plays a
major role in every part of the business activities. It is used in all the area of the
activities under the different names. Finance can be classified into two major parts:
Private Finance, which includes the Individual, Firms, Business or Corporate Financial
activities to meet the requirements. Public Finance which concerns with revenue and
disbursement of Government such
as Central Government, State Government and Semi-Government Financial matters.
Definition:
Finance may be defined as the provision of money at the time when it is
required. Finance refers to the management of flow of money through an organization.
According to WHEELER, business finance may be defined as “that business
activity which is concerned with the acquisition and conservation of capital
CREC, Dept of MBA Page 4
ON
FINANCIAL MANAGEMENT
MBA I YEAR II SEMESTER
(JNTUA-R15)
Mr. P. PRATHAP KUMAR
ASST.PROFESSOR
DEPARTMENT OF MANAGEMENT STUDIES
CHADALAWADA RAMANAMMA ENGINEERING COLLEGE
CHADALAWADA NAGAR, RENIGUNTA ROAD, TIRUPATI (A.P) - 51750
CREC, Dept of MBA Page 1
, JAWAHARLAL NEHRU TECHNOLOGIAL UNIVERSITY ANANTAPUR
MBA Semester – II Th C
44
(14E00204) FINANCIAL MANAGEMENT
The objective of the course is to provide the necessary basic tools for the students so as
to
Manage the finance function. The students should be able to understand the management
of the
Financing of working capital needs and the long term capital needs of the business
organization
* Standard Discounting Table and Annuity tables shall be allowed in the
Examination
1. The Finance function: Nature and Scope. Importance of finance function – The new
Role in the contemporary scenario – Goals of finance function; Profit Vs Wealth Vs
Welfare; –Wealth maximization and Risk-Return trade off.
2. The Investment Decision: Investment decision process – Project generation, project
Evaluation, project selection and project implementation. Developing Cash Flow Data.
Using Evaluation Techniques – Traditional and DCF methods. The NPV Vs IRR
Debate.
3. The financing Decision: Sources of finance – a brief survey of financial instruments.
The capital structure decision in practice: EBIT-EPS analysis. Cost of capital: The
Concept – Average Vs Marginal cost of Capital. Measurement of cost of capital –
Component Costs and Weighted Average Cost. The Dividend Decision: Major forms of
Dividends
4. Introduction to working capital: Concepts and characteristics of working capital,
Factors determining the working capital. Estimation of working capital requirements.
Current Assets Management: Management of current assets – Cash, Receivables and
Inventory. Cash budget, Credit terms – Financing current assets
5. Corporate Restructures: Corporate Mergers and acquisitions and take-over’s-Types
of
Mergers, motives for mergers, Principles of corporate governance.
References
Financial management –V.K.Bhalla ,S.Chand
Financial Management, I.M. Pandey, Vikas Publishers.
Financial Management--Text and Problems, MY Khan and PK Jain, Tata
McGraw- Hill,
Financial Management, Dr.V.R.Palanivelu, S.Chand
Principles of Corporate Finance, Richard A Brealey etal. Tata McGraw Hill.
Fundamentals of Financial Management, Chandra Bose D, PHI
Financial Management, William R.Lasheir, Cengage.
Financial Management – Text and cases, Bingham & Earhart, Cengage.
Case Studies in Finance, Bruner.R.F, Tata McGraw Hill, New Delhi.
Financial management, Dr.M.K.Rastogi, Laxmi Publications
CREC, Dept of MBA Page 2
, UNIT-I
CREC, Dept of MBA Page 3
, THE FINANCE FUNCTION
INTRODUCTION:
In our present day economy, Finance is defined as the provision of money at the
time when it is required. Every enterprise, whether big, medium or small needs finance
to carry on its operations and to achieve its targets. In fact, finance is so indispensable
today that it is rightly said to be the life blood of an enterprise.
MEANING OF FINANCE
Finance may be defined as the art and science of managing money. It includes financial
service and financial instruments. Finance also is referred as the provision of money at
the time when it is needed. Finance function is the procurement of funds and their
effective utilization in business concerns. The concept of finance includes capital, funds,
money, and amount. But each word is having unique meaning. Studying and
understanding the concept of finance become an important part of the business concern
TYPES OF FINANCE
Finance is one of the important and integral part of business concerns, hence, it plays a
major role in every part of the business activities. It is used in all the area of the
activities under the different names. Finance can be classified into two major parts:
Private Finance, which includes the Individual, Firms, Business or Corporate Financial
activities to meet the requirements. Public Finance which concerns with revenue and
disbursement of Government such
as Central Government, State Government and Semi-Government Financial matters.
Definition:
Finance may be defined as the provision of money at the time when it is
required. Finance refers to the management of flow of money through an organization.
According to WHEELER, business finance may be defined as “that business
activity which is concerned with the acquisition and conservation of capital
CREC, Dept of MBA Page 4
