Delhi University SYBMS Sem 3 Syllabus: Corporate Finance

Corporate Finance is the study of money related decisions of the organization. Corporate Finance is applicable to all businesses and corporations. The objective of corporate finance is to figure out how a company’s value can be maximized by taking decisions about investment, financing and dividends.

The subject Corporate Finance acquaints Delhi University BMS students with the techniques of corporate finance and their applications for business decision making.

Here we present Delhi University SYBMS Sem 3 Syllabus: Corporate Finance:

Unit 1 – 7 lectures

1. Nature of financial management
2. Finance and related disciplines
3. Scope of financial management
4. Profit maximization
5. Wealth maximization –traditional and modern approach
6. Functions of finance – finance decision, investment decision, dividend decision
7. Objectives of Financial management
8. Organization of finance function
9. Emerging roles of finance managers in India
10. Concept of time value of money
11. Future value of a single amount and an annuity
12. Present value of a single amount, an annuity and a perpetuity

Unit 2 – 14 lectures

1. Long term investment decision
2. Capital budgeting – nature and meaning
3. Cash flows and accounting profits
4. Evaluation techniques – accounting rate of return, pay back, net present value, internal rate of return, terminal value, profitability index method.
5. Understanding computation of depreciation based on the concept of block of assets

Unit 3 – 8 lectures

1. Concept and measurement of cost of capital
2. Explicit and implicit costs
3. Measurement of specific costs – cost of debt, cost of perpetual debt, cost of redeemable debt, cost of preference share,
4. Cost of equity capital – dividend valuation model
5. Cost of retained earnings
6. Computation of overall cost of capital based on book value weights and market value weights

Unit 4- 14 lectures

1. Financing decision
2. Leverage analysis – operating, financial and combined leverage
3. Earning before interest and tax (EBIT)
4. Earning per share (EPS) analysis
5. Indifference point
6. Capital structures theories – net income approach
7. Net operating income approach
8. Modigliani – Miller (MM) approach
9. Traditional approach
10. Dividend decision
11. Relevance and irrelevance of dividends
12. Residual theory of dividends
13. Modigliani and Miller hypothesis
14. Walter’s model
15. Gordon’s model

Unit 5 – 13 lectures

1. Short-term investment decision
2. Concepts and definition of working capital
3. Determining financing mix
4. Permanent and temporary working capital
5. Determinants of working capital
6. Computation of working capital
7. Management of cash – motives of holding cash
8. Objectives of cash management
9. Factors determining cash needs
10. Preparation of cash budget based on receipts and payments method
11. Management of receivables – objectives
12. Collection cost
13. Capital cost
14. Default cost
15. Delinquency cost
16. Credit policies
17. Credit terms
18. Collection policies
19. Debtors outstanding and ageing analysis

Textbooks and References:

• Financial management – text, problems and cases – Khan, M.Y., & Jain, P.K.
• Financial management – theory and practice – Chandra, Prasanna (2008)
• Financial management – Pandey, I.M. (2010)
• Principles of corporate finance – Brealey, Richard, A.,& Myers, Stewart, C.