Certified Financial Management Professional (CFMP®) Program

Program Overview

The field of finance is broad and dynamic. It directly affects the lives of every person, every organization (private, public, governmental and non-governmental, business and not-for-profit). Financial management is concerned with the duties of the financial manager in the business firm where he manages the financial affairs of the business. The tasks performed by a financial manager include planning, extending credit to customers, evaluating proposed large expenditures, and raising money to fund the firm’s operations.

Learning Objectives

  • To acquaint the students about the Pros and cons of Financial planning and analysis
  • To inculcate the ways and means how to manage the operating financial activities of an organization efficiently and in the most cost-effective manner.
  • To equip the students with the tools and techniques for appraising various investment proposals.
  • To give a fair enough knowledge in respect of assessing risk in the investment undertakings and ways to mitigate the risks up to the maximum level.
  • To find the best possible financing mix to finance the proposed investments.
  • To explore ways other than bank loans for financing capital investments.

Program Outline

Module 1: Goals and Functions of Finance
  • Financial Goal
  • Value Creation
  • Maximization of EPS
  • Agency Problems
  • Dealing With Agency Problems
  • Principle of Maximization of Shareholder Wealth
  • Allocation of Savings in an Economy
  • Social Responsibility
  • Functions of Finance
  • New Investment Decision
  • Existing Investment Decision
  • External Investment Opportunities
  • Dividend/Share Repurchase Decision
Module 2: Concepts in Valuation
  • The Time Value of Money
  • Compound Interest
  • Present Value (PV)
  • Amortizing a Loan
  • Bond Returns
  • Relationship Between Price and Yield
  • Holding-Period Return
  • Return from a Stock Investment
  • Discount Models
  • Perpetual Growth Model
  • Retained Earnings and Dividend Growth
  • Growth Phases
  • Measuring Risk: Standard Deviation
Module 3: Market Risk and Returns
  • Efficient Financial Markets
  • Does Market Efficiency Always Hold?
  • Security Portfolios
  • Covariance of Returns
  • Two-Security Efficient Set
  • Different Correlations
  • Multiple Security Portfolio Analysis and Selection
  • Separation Theorem
  • Global Diversification
  • CAPM
  • The Security Market Line
  • Implications for the Valuation of the firm
  • Certain Issues with the CAPM
Module 4: Principles of Capital Investment
  • Administrative Framework
  • Project Classification
  • Level and Type of Capital Expenditure
  • Cash-Flow Forecasts
  • Replacement Decisions and Depreciation
  • Methods for Evaluation
  • Profitability Index (PI)
  • Mutual Exclusive and Dependency
  • Depreciation and Other Refinements in Cash-Flow Information
  • Salvage Value and Taxes
  • Working Capital Requirement
  • Inflation and Capital Budgeting
Module 5: Theory of Capital Structure
  • Calculating NOI Approach
  • Traditional Approach
  • Modigliani-Miller (MM) Position
  • Irrelevance in a CAPM Framework
  • Taxes and Capital Structure
  • Uncertainty of Tax Shield
  • Corporate Plus Personal Taxes
  • Merton Miller’s Equilibrium
  • Recapitulation
  • Effects of Bankruptcy Costs
  • Protective Covenants
  • Organizational Incentives to Manage Efficiently
Module 6: Making Capital Structure Decisions
  • EBIT-EPS Analysis
  • Break-Even, or Indifference, Analysis
  • Cash-Flow Ability to Service Debt
  • Effect on Debt Ratios
  • Effect of Security Ratings
  • Analysis Before Assigning a Grade
  • Timing and Flexibility
  • A Pecking Order of Financing
  • Financing Checklist
Module 7: Dividends and Share Repurchase: Theory and Practice
  • Procedural Aspects of Paying Dividends
  • Dividend Payout Irrelevance
  • Arguments for Dividend Payout Mattering
  • Impact of Other Imperfections
  • Financial Signaling
  • Share Repurchase
  • Method of Repurchase
  • Repurchasing as Part of a Dividend Decision
  • Stock Dividends
  • Stock Splits
  • Managerial Considerations as to Dividend/Share-Repurchase Policy
Module 8: Financial Ratio Analysis
  • Use of Financial Ratios
  • Five Types of Ratios
  • Liquidity Ratios
  • Current and Quick Ratio
  • Liquidity of Receivables
  • Duration of Payables
  • Liquidity of Inventories
  • Debt Ratios
  • Cash Flow to Debt and Capitalization
  • Coverage Ratios
  • Profitability Ratios
  • Turnover and Earning Power
  • Market Value Ratios
  • Predicting Financial Distress
  • Common Size & Index Analysis
Module 9: Financial Planning
  • Methods of Analysis
  • Source and Use of Funds
  • Funds Statement on a Cash Basis
  • Accounting Statement of Cash Flows
  • Cash Budgeting
  • Receivable Collection Period
  • Forecasting Disbursements
  • Net Cash Flow and Cash Balance
  • Deviations from Expected Cash Flows
  • Pro Forma Income Statement
  • Pro Forma Balance Sheet
  • Use of Ratios and Implications
  • Sustainable Growth Modeling
Module 10: Liquidity, Cash, and Marketable Securities
  • Liquidity and Its Role
  • Benefits Relative to Cost
  • Cash Management and Collections
  • Transferring Funds
  • Concentration Banking
  • Lockbox System
  • Preauthorized Checks (PAC)
  • International Cash Management
  • Control of Disbursements
  • Investment in Marketable Securities
  • Types of Marketable Securities
  • Portfolio Management
  • Certainty of Cash-Flow Projections
Module 11: Management of Accounts Receivable and Inventories
  • Credit Policies
  • Credit Standards
  • Profitability of a More Liberal Extension of Credit
  • Effects of Changing Credit Standards
  • Evaluating the Credit Applicant
  • Credit Scoring
  • Sequential Investigation Process
  • Outsourcing Credit and Collections
  • Inventory Management and Control
  • Uncertainty and Safety Stock
  • Inventory and the Financial Manager
Module 12: Liability Management and Short/Medium-Term Financing
  • Liability Structure of a Company
  • Imperfections and Incompleteness
  • Permanent and Temporary Financing Agency and Signaling Issues
  • Trade Credit Financing
  • Accrual Accounts as Spontaneous Financing
  • Unsecured Short-Term Loans
  • Methods of Computing Interest Rates
  • Secured Lending Arrangements
  • Negotiating Restrictions and the Option Pricing Theory