Fundamentals of Financial Management | Syllabus and Model Question

 

 

Bachelor of Business Studies (BBS)

Programme objective

The  objective  of  the  BBS  programme  at  the  FOM  is  to  develop  students  into  competent  managers  for  any sector  of  organized  activity.  The  programme  is  based  on  the  principle  that  graduates  will  spend  a  major portion of their life in a constantly changing environment. Therefore, the student should have an opportunity to  obtain  a  broad  knowledge  of  the  concepts  and  reality based skills  underlying  the  operation  and management of organizations.

Upon graduation, students should be equipped to function as a manager in business, industry and government.

The  graduate  should  also  have  a  variety  of  career  opportunities  in  different  sectors  of  business  including entrepreneurship and create much needed jobs for others.

 

The BBS programme specially attempts to:

1. Equip the students with the required conceptual knowledge of business and administration to develop a general management perspective in them.

2. Develop required attitudes, abilities and practical skill in students, which constitute a foundation for their growth into competent and responsible business managers.

3. Encourage  entrepreneurial  capabilities  in  students  to  make  them  effective  change  agents  in  the Nepalese society.  

4. Develop  necessary  foundation  for  higher  studies  in  management  and  thereafter  take  up careers  in teaching, research and consultancy.   

 

Curricular structure

The  FOM  recognizes  the  need  for  both  breadth  and  depth  in  the  total  academic  pattern. 

Therefore, the curriculum for BBS degree comprises four separate and distinct course components:

 

1. A strong foundation  allied areas of business such as language, economic analysis, legal environment and   quantitative   method   to   prepare   graduates   to   understand,   analyze   and   comprehend   the management concepts, theories and practices.

 

2. Core business studies encompassing and integrating all functional areas to provide graduates with and appreciation of the diversity and inter-relationship of business and management issues.

 

3. The  opportunity  to  concentrate  in  one  area  of  specialization  such  as  accounting,  finance,  human resources  management  and  marketing  in  order  to  provide  graduates  with  some  degree  of  functional expertise.

 

 

The Second Year Programme

The purpose of the second year programme is to provide basic concepts, tools and understanding of the foundation and core courses.

The foundations courses are required to develop understand business practices.

The core courses provide essentials of learning which are basic in the broad area of business studies.

The second-year programme is therefore organized into the following core and compulsory courses:

Second Year (500)

MGT 205: Business Communication 100

MGT 209: Macroeconomics for Business 100

MGT 212: Cost and Management Accounting 100

MGT 223: Organizational Behavior & Human Resource Management 100

MGT 215: Fundamentals of Financial Management 100

 

 

 

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Fundamentals of Financial Management (FIN 215)

Full Marks: 100

Pass Marks: 35

Lecture Hours: 150

 

Course Objective

This course Fundamentals of Financial Management aims to lay the foundation for understandings fundamental concepts and principles of financial management. This course has been structured as a compulsory course in finance.

This course equips the students with fundamental tools and techniques of financial management to prepare them to resolve complex financial issues concerning corporate firms.

 

Course Description

This course is a core course in finance and includes the basic area of financial management functions.

This course consists of the introduction to financial management, understanding, and analysis of financial statements, time value of money, fundamentals of risk and return theory, bond valuation, stock valuation, cost of capital, capital structure and leverage, working capital management, and distributions to shareholders.

 

Course Detail

Unit 1: Introduction to Financial Management LH 7

Nature of financial management; Finance within an organization;

Functions of financial management;

The financial goal: creating value for investors;

Balancing shareholder interest and the interests of society.

 

Unit 2: Financial Statement Analysis LH 15

Financial statements: Balance sheet, profit or loss statement, cash flow statement, statement of change in shareholders’ equity; Framework for analysis;

Nature and need of financial ratio analysis;

Types of financial ratios: liquidity ratios, asset management ratios, debt management ratios, profitability ratios, market value ratios;

DuPont system of financial ratio analysis;

Ratios in different industries;

Uses and limitations of financial ratios;

Common size and index analysis.

 

Unit 3: Time Value of Money LH 20

Concept time value of money;

Cash flow time line;

Future values and present values of a single cash flow;

Finding the interest rate and the number of years;

Future value and present value of an ordinary annuity and annuity due;

Finding annuity payments, periods and interest rates;

Present value of perpetuities; Present value and future value of uneven cash flows;

Semiannual and other compounding periods;

Preparation of loan amortization schedule;

Application of the concept of time value of money.

 

Unit 4: Fundamentals of Risk and Return LH 18

Defining risk and return, expected rates of return, historical rates of return, standard deviation, coefficient of variation; Risk aversion and required returns;

Return and risk in a portfolio context: The role of covariance and correlation;

The capital asset pricing model (CAPM): the beta coefficient, the security market line (SML): The relationship between risk and rates of return.

 

Unit 5: Financial Assets Valuation LH 20

Concept of financial assets; Key characteristics of bonds, common stocks and preferred stocks; Basic financial asset valuation models;

Valuation of bonds: perpetual bonds, zero coupon bonds, coupon bonds with a finite maturity, bond valuation with semiannual interest; Discount bond and premium bond;

Bond yields: current yield, capital gain yield, holding period return, yield to maturity, yield to call;

Dividend discount model for stock valuation: zero-growth model, normal growth model, super-normal growth model, single period valuation, multi-period valuation;

Valuation of preferred stock.

 

Unit 6: Cost of Capital LH 10

Concept of cost of capital; Applications of cost of capital in financial decision making,

Component cost of capital: cost of debt, cost of preferred stock, the cost of retained earnings, the cost of new common stocks; Weighted average cost of capital (WACC); Factors affecting the WACC.

 

Unit 7: Capital Structure and Leverage LH 10

Concept of capital structure;

Business risk and operating leverage;

Financial risk and financial leverage; Total leverage;

Break-even analysis: Operating break-even, cash breakeven, financial break-even analysis.

 

Unit 8: Basics of Capital Budgeting LH 20

Characteristic of capital budgeting decision;

Capital budgeting decision process;

Types of capital budgeting projects;

Capital budgeting decision techniques: payback period, discounted payback period, net present value, profitability index, internal rate of return, modified internal rate of return; merits and limitations of each capital budgeting decision technique.

 

Unit 9: Working Capital Management LH 15

Concepts of working capital;

Types of working capital: Seasonal and permanent working capital,

Factors affecting the size of working capital;

Significance of working capital management;

The cash conversion cycle;

Significance of inventory management;

Basic inventory costs;

The economic order quantity model;

Reorder point and safety stock;

Quantity discount;

Significance cash management,

Cash budget;

Purpose of receivables management;

Elements of credit policy.

 

Unit 10: Distributions to Shareholders LH 15

Concept and types of dividends;

Factors affecting dividend policy;

Dividend payment procedures;

Dividend policy in practice: Stability in dividends and residual dividend policy;

Stock dividends, Stock splits, Reverse stock splits; Stock repurchases;

Dividend payment practices in Nepal

 

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Accounting Equation	http://tiny.cc/c89jkz
Journal Entries in Nepali	http://tiny.cc/uaakkz
Journal Entries	http://tiny.cc/8aakkz
Journal Entry and Ledger	http://tiny.cc/caakkz
Ledger	http://tiny.cc/haakkz
Subsidiary Book	http://tiny.cc/399jkz
Cashbook	http://tiny.cc/889jkz
Trial Balance and Adjusted Trial Balance	http://tiny.cc/c59jkz
Bank Reconciliation Statement (BRS)	http://tiny.cc/q59jkz
Depreciation	http://tiny.cc/ugakkz
Click on the link for YouTube videos chapter wise
Financial Accounting and Analysis (All videos)	http://tiny.cc/jlersz
Accounting Process	http://tiny.cc/mlersz
Accounting for Long Lived Assets	http://tiny.cc/plersz
Analysis of Financial Statement	http://tiny.cc/slersz

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Model Question

 

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