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Course Outline Business

The Financial Management course provides foundational knowledge of business finance, focusing on the finance function, the role of finance managers, and the financial environment affecting organizations. Students will learn to analyze financial statements, understand the time value of money, and evaluate investment and financing decisions. The course also covers risk and return concepts, capital structure, and introduces Islamic finance principles.

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Haider Jaffar
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4 views

Course Outline Business

The Financial Management course provides foundational knowledge of business finance, focusing on the finance function, the role of finance managers, and the financial environment affecting organizations. Students will learn to analyze financial statements, understand the time value of money, and evaluate investment and financing decisions. The course also covers risk and return concepts, capital structure, and introduces Islamic finance principles.

Uploaded by

Haider Jaffar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Financial Management

COURSE DESCRIPTION
Financial Management course aims at imparting knowledge about the very basic concepts and
tools of Business Finance. It emphasizes the importance of Financial Management skills to
individuals and enterprises. It deals with the finance function in an organization, the role of the
finance manager and the financial environment in which the firm operates. The financial
environment covers the understanding of financial and capital markets along with the broad
orientation of macro-economic factors affecting the business. The emphasis will remain on
developing the skills for planning, appraising and evaluating the investment, financing and
operating decisions.
Learning Outcomes
On completion of the course, students will be able to understand:
1. Functions of business finance and finance manager.
2. The basics of finance theory and its applications to corporate financial decisions.
3. Analysis of financial statements.
4. Tools and techniques of time value of money for investing decisions.
5. Concepts of risk and return for portfolio management.
6. The principles of capital structure.
7. The concept of cost of capital.
COURSE CONTENTS
Week 01 An Overview of Business Finance
• Finance a quick look.
• Business finance and financial manager.
• Forms of business organization.
• Goals of business finance.
• Agency problem.
Understanding financial statements and cash flows.
• The balance sheet.
Week02 • The income statement.
• Taxes.
• Cash flow.
Analyzing the financial statements
• Standardized financial statements.
• Ratio analysis.
Week03
• The Du-pont identity .
• Internal and sustainable growth.
• Usinq financial statement information.
Time Value of Money
• The role and perspectives of the TVM concept
• Future values
• Present values
• The relationship between future and present values
• Annuities
Week 04 & 05
• Future and present values of cash flows under high compounding
frequency
• Impact of higher compounding frequency
Inflation and the Time Value of Money
Bond and Their Valuation
• Definition, types and features of bonds
Week06
• Valuation of bonds (the basic process)
• Basic relationships in bond valuation
• Bondholder's expected rate of return
• Risks associated with bond returns
Stocks and Their Valuation
• Shares and their basic features
• Benefits from a share investments
• Price of ordinary shares
• Behaviour of expected dividend growth and share price
Week 07 & 08 • Price of shares based on earnings
• Expected rate of return
• Preferred shares and their characteristics
• Price of preferred shared and the expected rate of return
• Valuing the entire business
Net present value and other investment Criteria
• Net present value.
• The payback rule.
Week 09 & 10
• The average accounting return.
• The internal rate of return.
• The profitability index.
• The practice of capital budqeting.
Introduction to Islamic Finance.
The concept of:
Week 11 & 12 Mudarba Musharqa
Murabah
ljarah
Comparison with the conventional financial system
Risk and Return
• Expected returns and risk defined
• Calculating expected return
• Calculating risk (Variance and Standard deviation)
Week 13-14 • Portfolio expected returns
• Portfolio variance and standard deviation
• Systematic and unsystematic risk
Diversification and portfolio risk
The Cost of Capital
• The cost of capital concepts
• Individual and weighted average costs of capital
• Costs of capital and valuation
• Capital structure
• Capital structure decision (No taxes or other capital market
Week 15 & 16 imperfections)
• Taxation and capital structure decision
• Debt equity ratio, cost of capital and the value of the firm (The MM
Propositions)
• Optimal capital structure
• Costs of financial distress and bankruptcy
• The static trade-off theory
• The pecking order theory
• Personal taxes
Evidence on capital structure determinants
RECOMMENDED TEXT BOOKS (Latest available edition)
1. Ross, Westerfield, Jordan: Corporate Finance Essentials.
2. Jemes C. Vanhorne: Fundamentals of Financial Management
3. Eugene F. Brigham: Fundamentals of Financial Management
4. Brealey, R. A. & Myers, Principles of corporate finance.

Instructor: Muhammad Yaqoob


Mobile #:0301 3571105

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