KIIT School of Management (KSOM)

Course Outline
CORPORATE FINANCE- I

Programme : MBA
Semester : II (Batch: 2018-20)
No of Sessions : 20 sessions of 30hrs (2.00 Credit Course)
Course Code : BM5205
Instructors : Prof. K K Ray
Contact Details : Email: kkray@ksom.ac.in

Course Background:
This course, Corporate Finance I is targeted to explain the finance function of every business
organizations and enable the managers to take finance decisions for wealth maximization of the
shareholders. The subject focuses on effective financial management of investment (both long term
and short term) of business firms besides value of money concepts, investment risk and return
estimations and general financial environment of the country. The pedagogy of the course includes
small case discussion and practical implication of financial theory into Indian conditions. The
corporate finance I course is the foundation course that every management student should understand
irrespective of their specialization area or interest.

Learning Outcomes:
After completion of the course, students can able to apprehend the following:
 How the financial functions work in any business organization?
 How the Indian Financial system works?
 Role of risk and return in investment decisions
 The significance of time value of money in the financial decision making
 The techniques used for long term investment analysis
 The significance of cost of capital in business decision making
 Working capital management practices and estimations

Course Prerequisites:
Basic finance knowledge is required for better understanding the subject. Since this course is
constantly referred the financial statements, a detailed knowledge of financial accounting discussed
earlier is essential to participate in the deliberations of this course. In addition to all these, it is
expected that students are familiar with the Indian financial system and more particularly the financial
market operations in India to relate the topics. Moreover, the common sense of students and their idea
of managing own financial matters would help in greater extend to understand the course better.

Evaluation Components:
The basis for evaluation is sketched below:

Components Weightage
Quiz 20%
Class Participation 20%
Mid-Term exam 20%
End- Term exam 40%

1
Text Book:
1. Financial Management by IM Pandey, Vikas Publication, Eleventh edition (IMP)
Reference Books:
1. Financial Management: Theory and Practice by Prasanna Chandra; McGraw Hill
2. Principles of Corporate Finance by Brearly,Mayers, Allen and Mohanty; TMH
3. Corporate Finance: Theory & Practice by Damodaran; Wiley
4. Fundamentals of Financial Management by Brigham & Houston; CENGAGE
5. Lawrence J Gitman, Principles of Managerial Finance, Pearson Publication, Eleventh Edition
6. Stephen A Ross, R W Westerfield, Jeffrey Jaffe and R K Kakani, Corporate Finance, TMH
Publishing, 8th Edition.
7. Alan C Shapiro and S D Balbirer, Modern Corporate Finance, Pearson Education.
8. M Y Khan and P K Jain, Financial Management: Text, Problems and Cases, TMH Publishing

Session Plan:
Session Topic Issues to be discussed Reading
1-2 How to read Balance Sheet Company annual report discussion, Company Act
financial statement analysis, discussion 2013
in details the balance sheet item as per provisions
New company act 2013. Annual reports
of companies
3-4 Financial Management Revision of financial Accounting Chapter 1:
introduction and overview Introduction, Understanding finance IMP
function, Forms of Business
Organization, Role of Finance
Managers, Goal of financial
management, Agency Theory,
Stakeholders' Theory
5-6 Financial Environment Financial Markets and Institutions, Chapter 19:
(Indian Financial System) Indian Financial systems and its IMP
constituents, financial instruments etc.
Regulatory Framework
7-8 Time Value of Money Future Value, Present Value, Annuities, Chapter 2:
Perpetuities etc. IMP
Exercises
9-10 Risk and Return: An Return of an Asset, Expected Return, Chapter 4:
Overview of Capital Calculation of Risk Portfolio Risk and IMP
Market Theory return Calculations, CAPM, Beta
estimation and interpretations, Security
Market Line, Cost of Equity,
introduction to efficient frontier and
optimum portfolio
MID-TERM EXAMINATION
11-12 Cost of Capital Cost of Debt, Preference Share, Cost of Chapter 9:
Equity, Weighted Average cost of IMP
capital
13-16 Long-term Investment Capital budgeting concepts, cash flow Chapter 8-11:
decision estimation; techniques for evaluation – IMP
(Capital Budgeting) Net Present Value (NPV)
Internal Rate of Return (IRR) Other
methods – Payback Period, ARR,
Modified IRR Risk Analysis in Capital
Budgeting
Investment Selection Criteria

2
17-19 Short-term investment Concepts of Working Capital, Policies, Chapter 27-31:
decision: Working Capital working capital Financing Policies, The IMP
Management Cash Conversion Cycle
20 Special Topics in Finance
& Revision