FINANCIAL MANAGEMENT
&
INTERNATIONAL FINANCE
FINAL
GROUP - III
PAPER - 12
STUDY NOTES
THE INSTITUTE OF
COST AND WORKS ACCOUNTANTS OF INDIA
12, SUDDER STREET, KOLKATA - 700 016
,First Edition : May 2008
Revised Edition : March 2009
First Reprint of Revised Edition : June 2010
Published by :
Directorate of Studies
The Institute of Cost and Works Accountants of India
12, Sudder Street, Kolkata - 700 016
Printed at : India Ltd., Navi Mumbai, India.
Copyright of these Study Notes is reserved by the Institute of Cost and
Works Accountants of India and prior permission from the Institute is
necessary for reproduction of the whole or any part thereof.
, PAPER - 12
FINANCIAL MANAGEMENT AND INTERNATIONAL FINANCE
Contents
Study Note - 1 Overview of Financial Management
Section Particulars Page No .
Section 1 Finance and Related Discipline 1–5
Section 2 Objective & Scope of Financial Management 6–9
Section 3 Planning Environment 10 – 15
Section 4 Key Decisions of Financial Management 16 – 20
Section 5 Emerging Role of Finance Managers 21
Section 6 Earnings Distribution Policy 22 – 23
Section 7 Compliance of Regulatory Requirements in Formulation
of Financial Strategies 24 – 36
Section 8 Sources of Finance - Long Term, Short Term and
International 37 – 46
Section 9 Exchange rate - Risk Agencies Involved And Procedure
Followed in International Financial Operations 47 – 56
Study Note - 2 Financial Management Decisions
Section 1 Capital Structure Theory 57 – 65
Section 2 Cost of Capital 66 – 107
Section 3 Capital Budgeting 108 – 177
Section 4 Replacement and Lease Decisions 178 – 202
Section 5 Working Capital 203 – 264
Section 6 Financial Services 265 – 284
Section 7 Dividend Policy 285 – 319
Section 8 Financial Management in Public Sector 320 – 332
Section 9 Role of Treasury Function 333 – 336
Section 10 Contemporary Developments 337 – 340
, Study Note - 3 Financial Analysis and Planning
Section 1 Funds Flow Analysis 341 – 382
Section 2 Ratio Analysis 383 – 399
Section 3 Identification of Information Required To Access 400 – 431
Financial Performance
Study Note - 4 Leverage
Section 1 Analysis of Operating and Financial Leverages 432 – 448
Study Note - 5 Financial Strategy
Section 1 Understanding Financial Strategy 449 – 453
Section 2 Financial and Non-Financial Objectives of
Different Organizations 454 – 465
Section 3 Impact on Investment, Finance and Dividend Decisions 466 – 473
Section 4 Alternative Financing Strategy in the Context of
Regulatory Requirements 474 – 478
Section 5 Modeling and Forecasting Cash Flows and Financial
Statements 479 – 481
Section 6 Sensitivity Analysis for Changes in Expected Values
in the Models and Forecasts 482 – 497
Study Note - 6 Investment Decisions
Section 1 Cost Benefits Risks Analysis for Projects 498 – 506
Section 2 Designing Capital Structure 507 – 511
Section 3 Capital Investment Real Options 512 – 514
Section 4 Venture Capital 515 – 518
Section 5 Hybrid Finance 519 – 542
Study Note - 7 Project Management
Section 1 Project Identification and Formulation 543 – 548
Section 2 Identification of Project Opportunities 549 – 558
Section 3 Project Selection Considerations and Feasibility Studies 559 – 567
Section 4 Project Appraisal and Cost Benefit Analysis 568 – 579
Section 5 Sources of Project Finance and Foreign Collaboration 580 – 601
&
INTERNATIONAL FINANCE
FINAL
GROUP - III
PAPER - 12
STUDY NOTES
THE INSTITUTE OF
COST AND WORKS ACCOUNTANTS OF INDIA
12, SUDDER STREET, KOLKATA - 700 016
,First Edition : May 2008
Revised Edition : March 2009
First Reprint of Revised Edition : June 2010
Published by :
Directorate of Studies
The Institute of Cost and Works Accountants of India
12, Sudder Street, Kolkata - 700 016
Printed at : India Ltd., Navi Mumbai, India.
Copyright of these Study Notes is reserved by the Institute of Cost and
Works Accountants of India and prior permission from the Institute is
necessary for reproduction of the whole or any part thereof.
, PAPER - 12
FINANCIAL MANAGEMENT AND INTERNATIONAL FINANCE
Contents
Study Note - 1 Overview of Financial Management
Section Particulars Page No .
Section 1 Finance and Related Discipline 1–5
Section 2 Objective & Scope of Financial Management 6–9
Section 3 Planning Environment 10 – 15
Section 4 Key Decisions of Financial Management 16 – 20
Section 5 Emerging Role of Finance Managers 21
Section 6 Earnings Distribution Policy 22 – 23
Section 7 Compliance of Regulatory Requirements in Formulation
of Financial Strategies 24 – 36
Section 8 Sources of Finance - Long Term, Short Term and
International 37 – 46
Section 9 Exchange rate - Risk Agencies Involved And Procedure
Followed in International Financial Operations 47 – 56
Study Note - 2 Financial Management Decisions
Section 1 Capital Structure Theory 57 – 65
Section 2 Cost of Capital 66 – 107
Section 3 Capital Budgeting 108 – 177
Section 4 Replacement and Lease Decisions 178 – 202
Section 5 Working Capital 203 – 264
Section 6 Financial Services 265 – 284
Section 7 Dividend Policy 285 – 319
Section 8 Financial Management in Public Sector 320 – 332
Section 9 Role of Treasury Function 333 – 336
Section 10 Contemporary Developments 337 – 340
, Study Note - 3 Financial Analysis and Planning
Section 1 Funds Flow Analysis 341 – 382
Section 2 Ratio Analysis 383 – 399
Section 3 Identification of Information Required To Access 400 – 431
Financial Performance
Study Note - 4 Leverage
Section 1 Analysis of Operating and Financial Leverages 432 – 448
Study Note - 5 Financial Strategy
Section 1 Understanding Financial Strategy 449 – 453
Section 2 Financial and Non-Financial Objectives of
Different Organizations 454 – 465
Section 3 Impact on Investment, Finance and Dividend Decisions 466 – 473
Section 4 Alternative Financing Strategy in the Context of
Regulatory Requirements 474 – 478
Section 5 Modeling and Forecasting Cash Flows and Financial
Statements 479 – 481
Section 6 Sensitivity Analysis for Changes in Expected Values
in the Models and Forecasts 482 – 497
Study Note - 6 Investment Decisions
Section 1 Cost Benefits Risks Analysis for Projects 498 – 506
Section 2 Designing Capital Structure 507 – 511
Section 3 Capital Investment Real Options 512 – 514
Section 4 Venture Capital 515 – 518
Section 5 Hybrid Finance 519 – 542
Study Note - 7 Project Management
Section 1 Project Identification and Formulation 543 – 548
Section 2 Identification of Project Opportunities 549 – 558
Section 3 Project Selection Considerations and Feasibility Studies 559 – 567
Section 4 Project Appraisal and Cost Benefit Analysis 568 – 579
Section 5 Sources of Project Finance and Foreign Collaboration 580 – 601
