MGT 401

Department of Management Sciences
University of Gujrat
Course Outline Fall-2020
Course Information
Course Title Financial Management Course Code MGT-401
Credit Hours 3 Course Level MBA &BBA
Instructor Information
Name Sadia Bint Raza Office 207-A
Email Sadia.bint@uog.edu.pk Contact No. 03216225881
Course Details
1: Course Description
The course provides an understanding of what do we mean by funds, how we have to manage our
funds, how we can generate funds, how can we allocate funds to different departments in
organization, how to invest excess funds in profitable opportunities. The course is needed for
management/business students because they have to work in organizations and fund management
process in a critical part in every organization. The course comprises didactic lectures, two
assignments and a ‘Project’. Students will be given real time business examples about fund
management process that is involved in different organizations.
2: Course Objectives
The course objective is :
 Explain what Financial Management is
 Explain why we need to study Financial Management
 Describe investment in Long term assets
 Working capital Management (Short Term Assets Management )
 Capital structure and dividend policy
3: Course Learning Outcomes

This course develops the following competencies in the students.
 An ability to understanding different basics concepts of Financial Management
 An understanding of financing and investment decisions
 An ability to evaluate cheaper sources of financing and risk inherent in that source
 An ability to choose the investments with higher rate of returns
 Ability to understand the cost of invested capital
 Ability to manage the short term assets and maintain them at optimal level
4: Course Pre-requisite/s
Introduction to Business, Fundamentals of Accounting
5: Recommended Textbooks and Journals
 James C. Van Horne; Fundamentals of Financial Management; 12th Edition
 Brigham Huston; Fundamentals of Financial Management; 13th Edition
 Principals of Managerial Finance, by Lawrence J. Gitman; 14th Edition
Page 1 of 6

6: Course Evaluation Criteria
Course will be evaluated on following basis
Assignments: 5%
Project: 15%
Quizzes: 5%
Mid Term Examination: 25%
Final Examination: 50%
Total: 100
7: Plagiarism Policy
As per HEC policy
8: Assignment/Presentation/Case Study Briefings
PROJECT OVERVIEW
The focus of the project is to estimate the cost of capital of a firm. General guidelines on the
contents will be provided but you have some flexibility on how to present the material.
COMPANY SELECTION
The first letter of the selected company’s name should be the same as the first letter of the last
name of at least one member of the group. The selected company should:
(i) have been profitable during most of the past five years; and
(ii) have some long-term debt (LTD) so that the ratio of long-term debt to capital as measured by
LTD/(D+E+PS) is at least 5%.
You should not choose a financial company, real-estate investment trust (REIT), or a company
that is in distress. Some companies have a primary listing in their home country and have
depositary receipts (called GDRs or ADRs) traded in another country, such as the U.S. You
should not select an ADR/GDR for your company choice.
COST OF CAPITAL
Using the “Project – Estimation of Cost of Capital” notes determine the WACC of your selected
company (show all details in Exhibit 1)
 List values for D, E, and PS, and compute D/(D+E+PS), E/(D+E+PS), and PS/(D+E+PS)
ratios
 Use marginal corporate tax rate for the country of domicile
 Estimate beta using five years of monthly data for regression analysis (Exhibit 2)
 Calculate cost of equity, using CAPM -- show details of the inputs
 Calculate cost of debt -- show details of the method(s) used
 Calculate cost of preferred stock, if any
 Calculate WACC
Page 2 of 6

Sixteen Weeks Plan
Week Course Contents/Activities Teaching Deadlines
Method
1-2 Introduction to Financial Management Lecture &
 Overview of course & Course Assessments Discussions
 What do we understand by Financial
Management?
 Why to Study Financial Management?
 New Trends in Financial Management
Valuation
 Different types of bonds
 Bond Valuation of a General Bond
 Types of common stocks
 Common stock valuation
 Constant growth stocks
 Practice Numerical Questions from Van Horne
(Chapter )
03 The Cost of Capital Lecture, Assignment
 An overview of Weighted Average Cost of Discussions & #1
Capital Practical
 Cost of Debt Exercise
 Cost of Preferred Stocks
 Cost of retained Earnings
 Cost of New Common stock
 Composite or Weighted Average Cost of Capital
 Factors that affect WACC
(Chapter )
 Practice Numerical Questions from Brigham
(Chapter 10 )
04 Capital Structure & Leverage Lecture, Quiz # 1
 The Target Capital Structure Discussions &
 Business and Financial Risk Practical
 Determining the Optimal Capital Exercise
 Structure
 Capital Structure Theory
 Constrain Managers
 Checklist for Capital Structure
 Decisions
Variations in Capital Structures
05 Financial Planning & Leverage Lecture, Assignment
 Breakeven Analysis Discussions & #2
Page 3 of 6

 Operating & Financial Leverage & Analysis Practical
Exercise
06-07 Dividends and Share Repurchases Lecture, Quiz # 2
 Dividends versus Capital Gains: What Discussions &
 Do Investors Prefer? Practical
 Establishing the Dividend Policy in Exercise
 Practice
 Dividend Reinvestment Plans
 Stock Dividends and Stock Splits
 Stock Repurchases
(Chapter 15)
08 Revision and Project Class
Discussions
Mid-term Examination
09-10 Capital Budgeting Cash flows Lecture,
 Capital budgeting process Discussions &
 Generating investment proposals Practical
 Estimating initial investment of New project Exercise
 Estimating initial investment of Replacement
Project
 Estimating operating Cash flow of New project
 Estimating operating Cash flow of Replacement
project
 Estimating terminal cash flows of New Project
 Estimating terminal cash flows of Replacement
Project
(Chapter 12)
(Chapter 12)
11 The Basics of Capital Budgeting Lecture, Assignment
 Project Classification Discussions & #3
 The Net Present Value (NPV) Criterion Practical
 Internal Rate of Return (IRR) Exercise
 Modified Internal Rate of Return (MIRR)
 Payback Period
 Conclusion on Capital Budgeting Methods
(Chapter 13)
(Chapter 11)
12 Working Capital Management Lecture,
 Overview of Working Capital management Discussions &
Page 4 of 6

 Working Capital Concepts, Significance of WC Practical
 Profitability and Risk Exercise
 Working Capital issues
 Financing Current Assets- Long term and Long-
term Mix
 Combining Liability Structure and Current
Asset Decisions
(Chapter 08)
(Chapter 16)
13 Cash and Marketable Securities Management Quiz # 03
 Speeding Up cash Receipts
 Slowing Down Cash Payouts
 Cash Balances to Maintain
(Chapter 09)
14-15 Account Receivable and Inventory Management Lecture, Assignment
 Credit and collection Policies Discussions & #4
 Analyzing the credit Applications Practical
 Inventory Management and Control Exercise Lecture
 Short Term Financing Class
 Spontaneous Financing Discussions
 Negotiated Financing
 Factoring Accounts Receivable
 Composition of Short-Term Financing
(Chapter 14)
(Chapter 16)
16 Presentations
Presentations
End-term Examination
*Lecture, Discussion, Class Seminar, Case Study, Presentation etc.
Lecture, Discussion &
Practical Exercise
Signature
Course Instructor
Signature
Page 5 of 6

Coordinator Specialization
Signature
Chairperson, Department of Management Sciences
Signature
Dean, Faculty of Management and Administrative Sciences
Page 6 of 6

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Department of Management Sciences

Course Outline Fall-2020

3: Course Learning Outcomes

Course Outline Fall-2020

Course Outline Fall-2020

Course Outline Fall-2020

Course Outline Fall-2020

Course Outline Fall-2020

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