Business finance: objectives; finance function; organisation for financial management;
capitalization – over capitalization and undercapitalisation; causes, consequences and
remedies; fair capitalization; leverage analysis – operating and financial, combined leverage.
Capital structure; theories of capital structure; net income approach; net operating income
approach; traditional;MMapproach; indifference point.
Cost of capital – computations of cost of equity, preference, debt and retained earnings;
weighted average cost of capital; adjustments for uncertainty; opportunity cost of capital;
marginal cost of capital; capital asset pricing model.
Working capital management: Management of cash and marketable securities; cash
management techniques – lock box system, concentration banking, selection of marketable
securities; management of receivables and inventories; techniques of account receivable
management, credit policy, credit terms, account collection techniques; inventory management;
committees on working capital management and their findings and recommendations.
(a) Lease financing – types of leasing; evaluation of lease; lease or buy decisions.
(b) Structures financing – securitisation.
(c) Factoring services: dimensions of working capital management; zero working capital.
(a) Dividend policy: Theories of dividend – Walter’s model, Gordon’s model, Residnual
theory,MMhypothesis; legal aspects of dividend, formulation of dividend policy.
(b) Corporate governance: history ; meaning; tests of corporate governance;
recommendations of audit committees; corporate governance in India; certification
of corporate governance; audit committees and the Companies Act.