MBA Syllabus for Semester I (Financial Management)

MBA Syllabus for Semester I (first)
Subject: Financial Management

Reason for studying Financial Management: The main reason for studying this subject is to develop a conceptual frame work of finance function and to acquaint the participants with the tools techniques and process of financial management in the realm of financial decision making.

UNIT- I
Introduction - nature concept of finance function, Distinction between Accounting and Finance function, Objectives of Financial Management - Profitability vs wealth Maximisation, Organisation for Finance Function, Time value of money valuation concept, compound value concept, Present value concept, Financial Planning and Financial Forecasting.

UNIT-II
Capital Structure Planning- Patterns of financial requirement, Objectives of an optimum capital structure, Security Mix, Capitalisation concept, Causes, Consequences and Remedies of over capitalisation and under capitalisation, Capital structure theories (with numerical problems), Sources of long term finance-shares and Debentures, New financial Instruments and Institutions Leverage Analysis.



UNIT-III
Management of Fixed Capital - Concept, relevance and computation of cost of capital nature and Scope of Capital Budgeting, Capital Budgeting, Analysis of risk and Uncertainty (with numerical problems).

UNIT-IV
Management of Working Capital - Concepts of working capital, Nature and Scope of Working Capital Management, Approaches to the Financing of Current Assets determining the financing mix, Financing of working capital, Estimation of working capital (with numerical problem).

UNIT-V
Management of Earnings- Nature and scope of management of earnings , Dividend Policy and Dividend Models , Waltor's Model , Gordon's Model , MM Hypothesis, Pattern of dividend policies (with numerical problems), Determinants of Dividend Policy.

Books suggested:
1. Brigham : Financial Management Theory and Practice
2. Horne, Wachowiez , Jr. : Fundamentals of : Financial Management
3. Westorn and Brigham : Managerial Finance
4. Van-Horne : : Financial Management and Policy
5. I.M. Pandey : : Financial Management

6. S.N. Maheshwari : : Financial Management 

COMPARISON CHART Of FURNACE OIL VS COAL GASIFICATION

Basis of Calculations



q  F.O. Consumption/Hr                                                          : 100 Liters

q  Daily running Hours                                                            : 24 Hrs

q  Total F.O. consumption/day                                                 : 2400 Liters
(100 Liters X 24 Hr)

q  Rate of F. O.                                                                         : Rs. 24.00 / Liter

q  Max. Temperature in  rotary  Kiln                                        : 750 – 900 deg C

q  C.V. of  Wood ( Avg )                                                              : 3000 K.cal/kg

q  Rate of coal (Approx.)                                                            : Rs. 2.5/ Kg
     (Including Transportation)

q  Rate of Electricity                                                                : Rs. 5/KW

q  Rate of trained Operator on daily wages                                : Rs. 300/day


q  Rate of un-skilled labor on daily wages                                 : Rs. 150/day




Analysis of proposed project against Oil firing

1.    Total F.O. consumption/day                                                                     :  2,400 Lit/Day


2.    Cost of  FO requirement/day                                                                    : Rs. 57,600/-
:: 2400 Liter X Rs. 24

3.    Requirement of wood  to replace 1 lit FO                                                  : Max.3.5 Kg/Lit FO

4.    Total wood requirement/day                                                                    : 8400 Kg/Day
:: 2400 Liter X 3.5 Kg

5.    Cost of  wood /Kg                                                                                      : Re.2.5/Kg

6.    Total cost of Wood                                                                                     : Rs. 21000 /day
:: 8400 Kg X Re.2.5/-

7.    Gasifier operating cost/day/plant

a) Power…………………     : 50 KW
:: 35 KW X 24 Hr X Rs. 5         = Rs. 4,200/day
     b) Labor …………………      : 6/Shift, total 18
:: Total 18 X Rs. 150                = Rs. 2,700/day
     c) Operator …………….      : 1/Shift, Total 3
:: Total 3 X Rs. 300                  = Rs.   900/day
     d) Maintenance
            There is no daily maintenance but annually we take
            approx. Rs. 2,00,000/annum, so
            Rs. 2,00,000/300 days            = Rs.  666/day,  or say Rs. 700/-
           
Gasifier operating cost/day/plant= Rs. 8,500/- day
          (a+b+c+d)

Gasifier operating cost/day                                                                      : Rs.8,500/day
     

8.    Total replacement cost/day                                                                      : Rs. 29,500/-
:: 6 + 7 = 8

9.    Gross benefits /day                                                                                  : Rs. 28,100/-
:: 2 – 8

10.  Gross benefits/months                                                                             : Rs. 7,02,500/-
:: Rs. 28,100/- x 25 days in month

11. Annually Gross Benefits                                                                           : Rs. 84,30,000/-
 :: Rs.  7,02,500/- x 12 Months

12. Total Project cost (approx.)                                                                        : Rs. 53,00,000/-
       ::   Capital cost of Gasifier + other expenses of pipeline, burners,
            Civil, electrical & plumbing works, Lab, cooling tower,
            transportation, crane charges etc.
           

13. Interest @ 12% pa on total Project cost                                                    : Rs. 6,36,000/-


14. R.O.I.                                                                                                        :  8 1/2 MONTHS

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