Corporate Finance Management - From Beginner to Advanced

Types of Financing, Ratio Analysis, Time Value of Money, Cost of Capital, Capital Structure, Leverage, Capital Budgeting

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Description

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This is a Corporate Financial management course from beginners to advanced level. It begins with understanding basic concepts and terms of financial management to application of the financial management in decision making. The course consists of video lectures along with solved illustrations and Quiz that provides better understanding of concept. It is logically divided into various Sections :

Module 1 : Introduction

(Includes Section 1)

Introduction and understanding the meaning of financial management.

Module 2 : Sources of Finance

(From Section 2 to Section 6)

Here we are identifying and understanding different sources of Finance. This includes all long term finance and medium term finance such as Equity and Preference share capital , Bonds and Debentures, Venture Capital, Asset Securitization, Lease Financing, Depository Receipts, Trade Credit and accrued expenses. It also includes all short term finance such as Bridge Finance, Treasury Bills, Certificate of Deposits, Commercial paper etc. All the sources of finance are explained in video lectures along with illustrations.

Module 3 : Financial Ratios and Analysis

(From Section 7 to Section 11)

Here We discuss about different types of Financial Ratios such as Liquidity Ratios (Short term solvency ratios) , Leverage Ratios (Long Term solvency ratios) ,Activity Ratios (Turnover ratios) and Profitability Ratios.

Liquidity Ratios includes current ratio, quick ratio, cash ratio and Interval measure ratio. Each ratio is explained in video lecture along with illustrations.

Leverage Ratios include equity ratio, debt ratio, debt to equity ratio, debt to total assets ratio, proprietary ratio, capital gearing ratio, debt service coverage ratio, dividend coverage ratio, interest coverage ratio, fixed charges coverage ratio etc. Each ratio is explained in video lecture along with illustrations.

Turnover ratios include fixed assets turnover ratio, net assets turnover ratio, current assets turnover ratio, working capital turnover ratio, inventory turnover ratio, receivables turnover ratio, payables turnover ratio etc. Each ratio is explained in video lecture along with illustrations.

Profitability ratios include gross profit ratio, net profit ratio, operating profit ratio, expenses ratio, return on assets, return on capital employed, return on equity, earning per share, dividend per share, dividend payout ratio, price earning ratio, dividend and earning yield ratio, market value by book value ratio, Q ratio. Each ratio is explained in video lecture along with illustrations.

DuPont Analysis on ROI (Return on Investment) , ROA (Return on Assets)  and ROE (Return on Equity)

This module also includes a comprehensive solved illustration that explains how to calculate all types of ratios and how to use these ratios for analysis and decision making.

Module 4 : Time Value of Money

(From Section 12 to Section 15)

Here we discuss about the concept of Time Value of Money and how to use concept of time value of money. The relationship between inflation, purchasing power and Time value of money is separately discussed. Other topics included are Difference between Simple interest and compound interest, Present value and Future value of money, Formula for present value and future value, Discount Factor, Annuity, Present Value and Future Value of Annuity. All topics are explained in video lecture along with examples.

Module 5 : Cost of Capital

(From Section 16 to Section 19)

Here we will learn how to calculate cost of capital for individual capitals i.e Cost of Debentures/ Bonds, Cost of Preference shares , Cost of Equity shares and then How to calculate total cost of capital.

Cost of debt/Bonds and debentures includes calculation of Cost of Redeemable and Irredeemable debts using approximation method and Internal Rate of Return (IRR) Method. It also includes separate lecture wherein logic for using current price in calculating cost of capital is explained.

Cost of Preference shares using Approximation method and Internal Rate of Return (IRR Method)

Cost of Equity and Retained Earnings using Dividend Price Model, Earnings Approach model, Gordon's growth model, Realized Yield Approach, Capital Asset Price Model is explained along with examples. Besides Calculation of Growth Rate for Gordon's growth model, Beta , Types of Risks - Systematic and Unsystematic risks are explained in separate video lecture along with examples.

This section is concluded by calculating weighted average cost of capital (WACC) and Marginal cost of capital.

Module 6 : Leverages

(From Section 20 to Section 23)

Here we will be learning about different types of Leverages - Operational Leverage, Financial Leverage and Combined Leverage. This will be followed by Formula to calculate degree of operating leverage (DOOL/DOL), degree of Financial leverage (DOFL/DFL) and degree of combined leverage (DOCL/DCL). Operating and Financial break even points are analyzed in separate lectures and relationship of break even points with leverage is discussed. Some other topics include relationship between Margin of Safety and Operational leverage, Relationship between Break even point - Fixed cost and operational leverage, Why financial leverage is known as trading on equity and double edge sword.

Module 7 : Capital Structure

(From Section 24 to Section 33)

It includes meaning of capital structure and capital structure theories. Following theories are discussed in this module : Net Income approach, Traditional Approach, Net Operating Income approach, Modigliani and Miller approach , Trade off theory and pecking theory. Along with this following topics are also discussed - meaning of arbitrage with solved illustrations, Indifference points, Over capitalization and under capitalization.

Module 8 : Capital Budgeting

(From Section 34 to Section 49)

It begins meaning of Capital Budgeting and purpose of Capital Budgeting. This is followed by process of capital budgeting and types of Capital budgeting decisions - Replacement and Modernization decisions, Expansion decisions, Diversification decisions, Mutually Exclusive decisions, Accept or Reject decision, Contingent decision.

Other terms such as incremental cashflows, Tax Benefit on Depreciation, Opportunity cost and Sunk cost, Working capital costs, allocated overhead costs are also explained in separate tutorials along with illustrations. This is followed by types of cashflows for new project and replacement project along with basic principles of calculating cashflows.

All Capital Budgeting Techniques i.e Payback Period Method, Payback Reciprocal Method, Accounting Rate of Return (ARR) Method, Discounted Payback period method, Profitability Index method (PI) , Net Present Value Method (NPV) , Internal Rate of Return Method (IRR) and Modified Internal Rate of Return (MIRR) are discussed in detail along with meaning , Illustrations , advantages and disadvantages. Reinvestment assumptions and anomalies in Net Present Value Method (NPV) and Internal Rate of Return Method (IRR) method along with reasons and examples are discussed separately.

Capital Rationing Meaning and Capital Rationing for Divisible and Indivisible projects is discussed along with solved illustrations.

Methods to analyze Mutually exclusive projects with different tenures - i.e Replacement chain Method and Equivalent annualized criterion method are also included along with solved examples.

Module 9 : Risk Analysis in Capital Budgeting

(From Section 50 to Section 55)

It begins with different types of risks involved in capital budgeting. This includes Project Specific risk, Company Specific risk, Industry Specific risk, Competitive risk, Market risk, Risk due to economic factors and International risk.

The following techniques of Risk analysis are explained along with example in separate video lectures :

  • Statistical Technique - Probability

  • Statistical Technique - Variance and Standard Deviation

  • Statistical Technique - Coefficient of Variation

  • Conventional Technique - Risk adjusted discount rate

  • Conventional Technique - Certainty Equivalents

  • Sensitivity Analysis

  • Scenario Analysis

Module 10 : Dividend Decisions

(From Section 56 to Section 62 )

It begins with the introduction on dividend decisions that includes separate video lectures on Significance of Dividend decisions, Forms of Dividend, Relationship between Retained Earnings and Growth, Factors affecting dividend decisions, Dividend Policies and types , Dividend policies for mature companies and growth companies.

It is followed by explanation of following theories of Dividend Policy :

  • Modigliani and Miller Hypothesis

  • Walter's Model

  • Gordon's Model

  • Dividend Discount Model - No Growth, Constant Growth and Variable Growth

  • Graham and Dodd Model

  • Linter's Model

Each Theory consists of video lectures explaining assumptions, formula , solved illustrations , advantages and limitations.

The module ends with explanation of Stock Splits.

Module 11 : Working Capital

(From Section 63to Section 70 )

This module begins with meaning significance and types of working capital.

The other sections includes following topics :

  • Optimum working capital

  • Operating Cycle and Working Capital Cycle - Meaning, Concept and Calculation along with comprehensive solved example

  • Estimation of Working Capital in detail that includes estimation of each and every component of working capital along with solved illustration.

  • Working Capital on Cash cost basis- Meaning, Concept and Calculation along with comprehensive solved example

  • Impact of Double Shift on Working Capital - Meaning, Concept and Calculation along with comprehensive solved example

Module 12 : Treasury and Cash Management

(From Section 71 to Section 75 )

It begins with meaning of Cash management along with functions of Treasury and Cash Management. It is followed by preparing of Cash Budgets - Both for long term and Short term along with solved illustrations.

Further it is followed by Cash Management Models and Theories. It includes William J Baumol's EOQ Model and Miller Orr Cash Management model.

It ends with lectures on recent developments in Cash Management Systems and Management of Marketable securities.

Module 13 : Inventory Management

(Section 76)

This includes various topics related to Inventory management such as Reorder Level, Reorder Quantity, Minimum stock level, average stock level , Maximum stock level, Danger level and buffer stock along with solved illustration on inventory management.

Module 14 : Management of Receivables and Payables

(From Section 77 to Section 81)

This module includes following topics :

  • Management of Debtors - Meaning and Objectives

  • Credit Policy - Meaning and Factors affecting credit policy

  • Approaches to evaluation of Credit policies along with the solved illustrations- Evaluation of Credit policies on Total Approach and Evaluation of Credit policies on Incremental Approach.

  • Financing receivables

  • Factoring services

  • Forfaiting

  • Innovations in receivables management

  • Monitoring of receivables

  • Management of Payables

  • Cost of Payables - Calculation along with solved illustration

Module 15 : Working Capital Finance

(Section 82)

This module includes following topics :

  • Meaning an types of Working capital Finance

  • Spontaneous working capital finance

  • Intercorporate debts and deposits

  • Commercial Papers

  • Bills discounting, Rediscounting and Factoring

  • Forms of Bank credit for working capital finance

Thus, this course provides complete understanding about basics of Corporate Finance or Management Finance. Hope you enjoy it.

Tip : It is better to solve illustrations along with lectures for better understanding of concept.

Happy Learning !

What You Will Learn!

  • Understand Meaning and Concepts of Finance Management
  • Identify and understand different Sources of Finance and Types
  • Types of Long Term and Medium Term finance
  • Types of Equity Share Capital and Preference share capital
  • What is Debentures/ Bonds ? Types of Debentures and Bonds
  • Venture Capital Financing
  • Asset Securitisation
  • Lease Financing - Explanation of concept and types of lease
  • Depository Receipts - ADR (American Depository Receipts), GDR (Global Depository Receipts) , IDR (Indian Depository Receipts))
  • Trade Credit
  • Accrued Expenses
  • Deferred Income and advance from customers
  • Short Term Bank advances and its types
  • Bridge Financing
  • Commercial Paper
  • Treasury bills and Certificate of Deposits
  • Different Types of Financial Ratios - Calculation and Analysis along with illustrations
  • Types of Liquidity Ratios / Short Term solvency Ratios - Calculation and analysis along with illustrations
  • Current Ratios
  • Quick Ratio / Acid Test Ratio
  • Cash Ratio / Absolute Liquidity Ratio
  • Interval Measure Ratio
  • Types of Leverage Ratios / Long Term solvency ratios - Calculation and analysis along with illustrations
  • Equity Ratios
  • Debt Ratio
  • Debt To Equity Ratios
  • Debt To Total Assets ratios
  • Proprietary Ratio
  • Capital Gearing Ratio
  • Debt Service Coverage Ratio
  • Dividend Coverage Ratio
  • Interest Coverage Ratio
  • Fixed Charges Coverage Ratio
  • Types of Activity Ratios / Turnover Ratios/ Efficiency Ratios / Performance Ratios - Calculation and analysis along with illustrations
  • Total Assets Turnover Ratio
  • Fixed Assets Turnover Ratio
  • Net Assets Turnover Ratio
  • Current Assets Turnover Ratio
  • Working Capital Turnover Ratio
  • Inventory Turnover Ratio
  • Receivables Turnover Ratio
  • Payables Turnover Ratio
  • Profitability Ratios - Calculation and analysis along with illustrations
  • Gross Profit Ratio
  • Net Profit Ratio
  • Operating Profit Ratio
  • Expenses Ratio - COGS Ratio, Office and Administration Expenses Ratio, Selling and Distribution Expenses Ratio, Operating Expenses Ratio
  • Return on Investment (ROI)
  • Return on Asset (ROA)
  • Return on Capital Employed (ROCE)
  • Return on Equity (ROE)
  • DuPont Analysis on ROI, ROA and ROE
  • Earning Per Share (EPS)
  • Dividend Per Share (DPS)
  • Dividend Payout Ratio
  • Price Earning Ratio
  • Dividend and Earning Yield Ratio
  • Market Value by Book Value (MVBV)
  • Q ratio
  • Time Value of Money - Concept and Use of Time value of Money
  • Simple Interest and Power of Compounding
  • Present Value and Future Value of Single Cash Flow
  • What is Annuity and Types of Annuity
  • Present Value and Future Value of Annuity
  • Annuity Factor and Discount Factor
  • Internal Rate of Return (IRR)
  • Cost of Capital
  • Cost of Redeemable and Irredeemable Debts
  • Cost of Zero Coupon Bonds using IRR method
  • Cost of Ammortised Bonds using IRR Method
  • Methods to Calculate cost of Equity
  • Gordon's Growth Model
  • Capital Asset Pricing Model (CAPM)
  • Cost of Preference Shares
  • Weighted average cost of Capital
  • Marginal Cost of Capital
  • What is Leverage ?
  • Operating Leverage, Financial Leverage and Combined Leverage
  • Break even Analysis- Operating Break even Point and Financial Break even point
  • Margin of Safety and Operating Leverage
  • Financial Leverage - Trading on Equity
  • Financial Leverage - Double edge Sword
  • Capital Structure Meaning and Theories
  • Net Income Approach
  • Traditional Approach
  • Net Operating Income Approach
  • Modigliani and Miller Approach
  • Arbitrage - Meaning and illustrations
  • Trade off Theory
  • Pecking Theory
  • EBIT- EPS - MP analysis
  • Return on Asset , Fixed Costs and EPS analysis
  • Financial Break even analysis
  • Indifference Points
  • Over Capitalisation and Under Capitalisation
  • Capital Budgeting - Meaning and Process
  • Types of Capital Investment decisions
  • Replacement and Modernization decision
  • Expansion Decision
  • Diversification Decision
  • Mutually Exclusive Proposals Decision
  • Accept or Reject Decision
  • Contingent Decision
  • Difference between Accounting Profit and Cashflow
  • Meaning of Incremental Cashflows
  • Depreciation and Tax Benefit on Depreciation
  • Opportunity Cost and Sunk Cost
  • Working Capital Cost
  • Allocated Overhead costs
  • Types of Cashflow for New Projects and Replacement Projects
  • How to Calculate Cashflows
  • Block of Assets and Depreciation Principle
  • Treatment of Financing Costs
  • Post Tax Principles
  • Capital Budgeting Techniques
  • Payback Period Method - Meaning, Illustrations advantages and Disadvantages
  • Payback Period Reciprocal Method
  • Accounting Rate of Return Method (ARR) - Meaning, Illustrations advantages and Disadvantages
  • Discounted Payback Period Method - Meaning, Illustrations advantages and Disadvantages
  • Profitability Index Method (PI) - Meaning, Illustrations advantages and Disadvantages
  • Net Present Value Method (NPV) - Meaning, Illustrations advantages and Disadvantages
  • Internal Rate of Return (IRR) - Meaning, Illustrations advantages and Disadvantages
  • Internal Rate of Return (IRR) and Net Present Value Method (NPV) Reinvestment Assumption
  • Multiple Internal Rate of Return (Multiple IRR)
  • Modified Internal Rate of Return (MIRR) - Meaning, Illustrations advantages and Disadvantages
  • Capital Rationing
  • Divisible and Non- Divisible Projects
  • Methods to analyze Mutually Exclusive Projects with different tenures
  • Replacement Chain Method
  • Equivalent Annualized Criterion Method
  • Risk analysis in Capital Budgeting
  • Project Specific Risk
  • Company Specific Risk
  • Industry Specific Risk
  • Competition risk
  • Risk due to economic factors
  • International risk
  • Market risk
  • Types of Risk Analysis Techniques
  • Risk Analysis Technique - Statistical Technique - Probability
  • Risk Analysis Technique - Statistical Technique - Standard deviation and Variance
  • Risk Analysis Technique - Statistical Technique - Coefficient of Variation
  • Risk Analysis Technique - Conventional Technique - Risk adjusted discount Rate
  • Risk Analysis Technique - Conventional Technique - Certainty Equivalent
  • Risk Analysis Technique - Sensitivity Analysis
  • Risk Analysis Technique - Scenario Analysis
  • Dividend decisions - Introduction and significance
  • Forms of Dividend - Cash Dividend and Bonus Shares (Stock Dividend)
  • Relationship between Retained earnings and Growth
  • Factors affecting Dividend decisions
  • Dividend Policy - Mature Company and Growth Company
  • Theories of Dividend Policy
  • Modigliani and Miller Hypothesis
  • Walter's Model
  • Gordon's Growth Model
  • Dividend Discount Model
  • Graham and Dodd Model
  • Linter's Model
  • Stock Splits
  • Meaning ,Significance and Types of Working Capital
  • Optimum Working Capital
  • Approaches for Working Capital Investment
  • Working Capital Cycle or Operating Cycle - Concept and calculation
  • Raw Material Storage Period
  • Work in Progress holding period
  • Finished Goods Storage Period
  • Receivables Collection Period
  • Payables Period
  • Working Capital Estimation
  • Working Capital on Cash cost basis
  • Impact of Double Shift on Working Capital
  • Treasury and Cash Management
  • Cash Budget
  • Accelerating Cash Collections and Controlling Payments
  • Cash Management Models
  • William J Baumol EOQ Model
  • Miller Orr Cash Management Model
  • Management of Marketable securities
  • Inventory Management Basics
  • Reorder Level
  • Reorder Quantity
  • Minimum Stock Level
  • Maximum Stock Level
  • Average Stock Level
  • Danger Level and Buffer Stock
  • Management of Debtors - Meaning and Objective
  • Factors determining Credit Policy
  • Approaches to evaluation of credit policies - Total Approach and Incremental Approach
  • Financing Receivables
  • Factoring Services evaluation
  • Forfaiting
  • Management of Payables and Cost of Payables
  • Working Capital Finance
  • Spontaneous Sources of Finance
  • Inter Corporate Loans and Deposits
  • Commercial Papers
  • Bills Discounting, Rediscounting and Factoring
  • Forms of Bank Credit

Who Should Attend!

  • Students pursuing Bachelor of Commerce
  • Students pursuing Chartered Accountancy course
  • Professionals who want to upgrade their knowledge in Finance management - Corporate Finance