Principles of Finance (2024-2025)

212401 Principles of Finance

Course objectives:
 
This course is aimed at introducing students to finance as a discipline, and to expose to the functions/duties of a financial manager in the business organization. Finance has evolved to assume a very important position in the decisional process of households, businesses, governments and other non-business organizations. In view of the fact that most business decisions are measured in financial terms, the financial manager plays a key role in the
operation of the firm. People in all areas of responsibility and departments/units, such as: accounting, operations, marketing, human resources management, etc. need a basic understanding of the financial manager‟s functions.
The course emphasizes the understanding of finance theories and working knowledge of the financial environment in which firm operates in order to develop appropriate financial strategies. Hence, it covers the whole range of basic finance concepts, financial environment, short-term financing, intermediate-term financing, long-term financing and valuation, time value of money, risk and return, capital budgeting techniques, leverage and working capital
management.

Course Learning Outcomes (CLOs)
The goal of the Principles of Finance course is for each student to develop an understanding
of the basic financial principles, concepts of finance, various techniques, practices in
businesses and the global market place. On the successful completion of this course, students
are expected to:
1. Define and understand key concept of finance, financial manager, goals of a firm and functions of finance, career opportunity of finance, agency relationship, agency conflict and resolving agency conflict.
2. Understand financial environment, forms of business organization, various taxes as well as concept of financial market, financial intermediaries and brokers;
3. Explain and identify the sources of financing for a firm and usage of funds such as: short-term sources of financing;
4. Understand and select the intermediate-term sources of financing for a firm and usage of funds;
5. Know and use the long-term sources of financing and application of valuation models in case of common stock, preferred stock and bonds, and explain yield-to-maturity (YTM) on bonds;
6. Explain the time value of money, compute the future value, present value and the rate of return on an investment for projects that involve single or multiple cash flow(s) with the help of compounding and discounting techniques;
7. Understand the concepts of risk and returns and measures risk by applying various techniques to find out the risk and return trade-off for making a good investment decision;
8. Discuss capital and capital budgeting techniques simultaneously application of capital
budgeting techniques to take financial decision about investment alternatives;
9. Clear concept of leverage, breakeven point and application types of leverage;
10. Explain the concept of working capital, operating cycle, cash conversion cycle, calculating the cash conversion cycle and inventory management, application of common techniques for managing inventory, accounts receivable management, credit selection and standards, credit terms and credit monitoring.