We have great pleasure in presenting First edition “Corporate Finance” written for students of UG courses. The related matters are written in a simple and easily understandable.
This volume is an attempt to pro vide the students with thorough understanding of Corporate Finance. We have presented the subject matter in a systematic manner with liberal use of charts and diagrams where ever necessary so as to make it interesting and sustain students’ interest.
Contents –
Module – 1 Introduction to Financial Environment and Time Value of Money
Introduction
Indian Financial System Overview
Role and Importance of Finance in Business
Corporate Financial Strategy
Functions and Financial Goals Time Value of Money Time Lines
Future Value
Present Value
Solving for Interest Rate and Time
Annuity
Future Value
Present Value
Present Value
Future Value of Growing Annuity
Solving for Interest Rate
Number of Periods and Perpetuities
Uneven Cash Flows Streams
Review Questions
Module – 2 Investment Decisions
Introduction
Capital Budgeting
Process of Capital Budgeting
use of Capital Budgeting Techniques in Practice
Methods of Appraising Proposals
Payback Period
ARR
NPV
IRR
MIRR
Profitability Index
Review Questions
Module – 3 Risk and Return Analysis of Securities
Introduction
Valuation of Equity and Bonds (Only Theory)
Risk and Return Concepts
Return Calculations for Stocks and Portfolios
Capital Asset Pricing Model (CAPM Only Theory)
Methods of Computing Cost of Capital
Cost of Equity
Cost of Preference Shares
Cost of Debt
Cost of Retained Earnings
Cost of Term Loans
Weighted Average Cost of Capital
Review Questions
Module – 4 Capital Structure and Dividend Decisions
Introduction
Introduction to Capital Structure
Optimal Capital Structure
Factors influencing Capital Structure
Approaches to Capital Structure – NI, NOI, and MM Hypothesis (with and without taxes)
Leverages
Financial
Operating
Combined Leverage
Dividend Decisions and Theories:
Walter’s
Gordon’s
MM Hypothesis
Relevance vs. Irrelevance Theories and Applications
Corporate Actions
Stock Split
Bonus Shares
Determinants of Corporate Dividend Policy
Review Questions
Module – 5 Working Capital Management
Introduction
Conceptual Issues and Types
Factors Affecting Working Capital
Sources of Working Capital
Estimating Working Capital Needs
Overview of Cash
Inventory
Receivables Management with Problems
Short-Term Financing Options
Review Questions
Module – 6 Practical Application in Corporate Finance
Introduction
This Module Integrates Tools
Techniques Through Excel-Based Financial Modelling
Time Value of Money Functions, FV, PV, Rate, NPER and PMT
Preparation of Loan Amortization Schedule
Capital Budgeting Models (NPV, IRR, Payback)
WACC Computation using Excel
Project Work
Preparation of Mini-projects Involving the Analysis of
Capital Structure
Working Capital Needs
Dividend Decisions of Selected Companies
Review Questions