AFM -B.Com 6th Sem Syllabus (BNU-NEP)

ADVANCED FINANCIAL MANAGEMENT

Module: 1 – CASH FLOWS CONCEPTS & MEASUREMENTS
Cash Flow: Introduction & Meaning, Utility of Cash Flow Measurements, Classification of Cash Flows,
Benefits from using Cash Flows; Concepts of Cash Flows: Discounted Cash Flow Analysis, Financing Flows,
Free Cash Flow, Investment Flows, Liability Swap, Net Present Value, Operating Cash Flows, Payout Period,
Price to Cash Flow Ratio
Cash Flow & Capital Budgeting, Principles of Cash Flow Estimation, Factors influencing Cash Flow
Estimation, Relationship between Cash Flow & Profit, Incremental Cash Flows
Components of Cash Flows: Initial Investment, Annual Cash Flows & Terminal Cash Flow

Module: 2 – RISK ANALYSIS IN CAPITAL BUDGETING
Risk Analysis: Introduction, Meaning, Types of Risks – Systematic & Unsystematic Risks, Risk and
Uncertainty
Techniques of Measuring Risks: RADR, Certainty Equivalent Approach, Sensitivity Analysis, Probability
Approach, Standard Deviation and Co-efficient of Variation –Decision Tree Analysis (Problems)

Module: 3 – COST OF CAPITAL AND CAPITAL STRUCTURE THEORIES
Cost of Capital: Meaning, Definition, Significance
Computation of Cost of Capital – Specific Cost – Cost of Debt – Cost of Preference Share Capital – Cost
of Equity Share Capital – Weighted Average Cost of Capital – Problems.
Theories of capital structures: Concept of Relevant & Irrelevant Theories, Net Income Approach, Net
Operating Income Approach, Traditional Approach and MM Hypothesis – Problems.

Module: 4 – DIVIDEND THEORIES
Dividend Decisions: Introduction, Meaning & Definition, Types of Dividends, Types of Dividends
Polices, Significance of Stable Dividend Policy, Determinants of Dividend Policy
Dividend Theories: Theories of Relevance & Theory of Irrelevance – Walter’s Model and Gordon’s Model
and The Miller-Modigliani (MM) Hypothesis – Problems

Module: 5 – MERGERS & ACQUISITIONS
Mergers & Acquisitions: Meaning, Types of Combinations, Types of Merger, Motives and Benefits of
Merger
Financial Evaluation of a Merger, Merger Negotiations, Leverage Buyout, Management Buyout
Meaning and Significance of P/E Ratio.
Problems on Exchange Ratios based on Assets Approach, Earnings Approach and Market Value Approach
and Impact of Merger on EPS, Market Price and Market capitalization.

SKILL DEVELOPMENT ACTIVITIES:

  1. Visit an organisation in your town and collect data about the financial objectives.
  2. Compute the specific cost and Weighted average cost of capital of an Organisation, you
    have visited.
  3. Case analysis of some live merger reported in business magazines.
  4. Meet the financial manager of any company, discuss ethical issues in financial
    management.
  5. Collect the data relating to dividend policies practices by any two companies.
  6. Any other activities, which are relevant to the course.

BOOKS FOR REFERENCE

  1. I M Pandey, Financial management, Vikas publications, New Delhi.
  2. Abrish Gupta, Financial management, Pearson.
  3. Khan & Jain, Basic Financial Management, TMH, New Delhi.
  4. S N Maheshwari, Principles of Financial Management, Sultan Chand & Sons, New
    Delhi.
  5. Chandra & Chandra D Bose, Fundamentals of Financial Management, PHI, New Delhi.
  6. B. Mariyappa, Advanced Financial Management, Himalaya Publishing House, New
    Delhi.
  7. Ravi M Kishore, Financial Management, Taxman Publications
  8. Prasanna Chandra, Financial Management, Theory and Practice, Tata McGraw Hill.
    Note: Latest edition of textbooks may be used

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