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Table of Contents Financial Treasury & Forex Management (FTFM) Introduction to Financial Management Superiority of Wealth Maximization Over Profit Maximization What is Financial Management? Functions of Financial Executives Time Value of Money Reasons of Time Preference of Money Techniques for Evaluating a Decision by Considering Time Value of Money Financing Decisions Cost of Capital Cost of Debt Cost of Normal Debentures Cost of Redeemable Debentures Cost of DebentuRes (Kd) Summary Cost of Preference Shares Cost of Loans Cost of Equity Computation of Growth Rate Computation of Beta Cost of Reserves Weighted Average Cost of Capital (WACC) or Overall Cost of Capital Marginal Cost of Capital Leverages When Operating Leverage Turns Into Operating Risk? Capital Structure Decisions EBIT EPS Analysis EBIT MPS Analysis Coverage Ratio Cash Flow Analysis Nature of the Industry Capital Structure Theories Net Income Approach (NI Approach) Net Operating Income Approach (NOI Approach) Modigliani Miller Approach (MM Approach) Traditional Approach Project Planning and Control Procedure of Capital Budgeting Project Life Cycle Significance of Capital Budgeting Types of Projects Feasibility Study of a Project Technical Appraisal Financial Appraisal Economic AppraIsal Commercial Appraisal Managerial Appraisal Social Cost Benefit Analysis (SCBA) Investment Decisions Meaning of Capital Budgeting Nature of Capital Budgeting Why Capital Budgeting/Investment Decision? Knock Out Accounting Approach Vs Cash Flow Approach Computation of Cash Inflows Depreciation as Per Income Tax and Its Effect on Cash Flows Non Discounting Techniques Computation of Pay Back Period Discounting/ Modern Techniques Net Present Value Reasons for Capital Rationing Optimal Replacement Cycle Risk Analysis in Capital Budgeting Dividend Decisions Dividend Policies Modigliani Miller Model (Irrelevance Theory) Working Capital Management Important Points Inventory Management Cash Management Security Analysis and Portfolio Management Investment V. Speculation Security Analysis Efficient Market Hypothesis/Theory (EMH) Random Walk Theory Dow Jones Theory Portfolio Management Measuring Risk in a Portfolio of N Securities Correlation (It Lies Between -1 To +1) Risk of Portfolio at Perfect Positive Correlation Risk of Portfolio at Perfect Negative Correlation Decision Based on Beta Capital Market Line (CML) Security Market Line (SML) Capital Assets Pricing Model Buying, Holding and Selling Shares Using CAPM Characteristic Line Derivatives Forward Contract Futures Contract Pricing a Futures Contract Index Futures Interest Rate Futures Options Swaps Interest Rate Swap Foreign Exchange (Forex) Management About Forex Market How Exchange Rate is Determined in India? Some Terms Used in Forex Market Pillars of International Finance Arbitrage Opportunities Can Be Identified in One of the Two Ways Foreign Exchange Risk Management Sources of Finance Preference Shares Debentures Equity Warrants With NCDS Secured Premium Notes Deep Discount Bond Zero Coupon Convertible Note Junk Bonds Venture Capital Global Depository Receipts Foreign Currency Convertible Bonds American Depository Receipts External Commercial Borrowing Corporate Restructuring & Insolvency (CRI) Corporate Restructuring Forms of Expansion Other Forms Types of Takeovers Defense Strategies to Takeover Bids Financial Defensive Measures Anti-Takeover Amendments or Shark Repellants (Section 31) Types of Anti-Take Over Amendments in Articles Features of Disinvestment Policy of Government Proposal + CCD + EOI + BIDS + SPA + IMG + CAG = Disinvestment Sections of Companies Act Section 390 Section 391 Section 393 Memorandum (MoA) Section 394 Section 396 Power of Central Government to Provide for Amalgamation of Companies in Public Interest Appointed Date Procedural Aspects Steps Involved in Mergers/Demergers/Amalgamations/Compromise/Arrangements Foreign Direct Investment (FDI) Policy, 2012 Takeovers Power and Duty to Acquire Shares of Shareholders Dissenting from Scheme or Contract Approved by Majority Demerger, Hiving Off & Slump Sale Slump Sale Demerger Accounting & Taxation Aspects Accounting Aspects Slump Sale Valuation Of Shares, Business & Brands & Practical Problems Legal Framework of Valuation Valuation Guidelines Capitalised Earnings Per Share (CEPS) Market Value Per Share Discounted Cash Flow (DCF) So, What is the Valuation Criteria? Preferential Allotment & Qualified Institutional Placement Under SEBI (Issue of Capital & Disclosure Requirements) Regulations, 2009 Takeover Code SEBI (Delisting Of Equity Shares) Regulations, 2009 SEBI (Employees Stock Option Scheme & Employee Stock Purchase Scheme) Guidelines, 1999 SEBI (Issue of Sweat Equity) Regulations, 2002 Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003 Unlisted Public Companies (Preferential Allotment) Rules, 2003 Non Financial Considerations in Valuation Valuation of Brands Functions of Brands Protect the Value of Brand ProblemsNo More A Problem!!! Post Merger Price Fund Raising Options Financing of Mergers & Amalgamations Reduction & Variation Alteration of Share Capital Reduction of Share Capital Procedure for Reduction of Capital Variation of Shareholders Rights Proportion Variation Authorisation Cancellation Confirmation Equity With Differential Voting Right (DVR) Buy Back of Securities Objectives Buy Back by an Unlisted Company Buy Back by a Listed Company Buy Back Under Companies Act Buy Back Under Company Rules Private Limited Company & Unlisted Public Limited Company (Buy Back Of Securities) Rules, 1999 Buy Back Under SEBI Regulations SEBI (Buy Back of Securities) Regulations, 1998 Methods of Buy Back Buy Back Procedure Points Specific to Buy Back Through Stock Exchange Points Specific to Buy Back Through Book Building Takeover Code Buyback Under Section 391 Route Case Laws & Miscellaneous Concepts When A Court Can Sanction the Scheme? Intimation to Central Government & Handling Objections Reduction of Capital Valuation Power to Amalgamate Merger With Subsidiary Whether Meeting of Members/Creditors Mandatory? Whether Court Convened Meeting is a General Meeting? Whether Both Transferor & Transferee Company Must Make Separate Applications Appointed Date Requirements of Act & Effective Date Few Other Cases Protection of Employees/Workers HR Perspective (Value Creation Approach) Competition Act Takeover Code Provisions of Banking Regulation Act, 1949 Stamp Duty Aspects of Amalgamation Competition Act, 2002 Strategies & Post Merger Reorganisation Levels of Strategies Strategic Planning Stages in Strategic Planning Importance of Strategic Planning Benefits of Strategic Planning Include Long Range Planning & Strategic Planning Strategic Management Competitive Advantage and Core Competencies Post Merger ReOrganization (PMR) Factors in Post Merger Reorganisation Integration of Business and Operation Post Merger Success and Valuation Human and Cultural Aspects Measuring Key Indicators Insolvency SARFAESI, DRT & Others Securitisation Process of Securitisation Features of Assets to be Securitised Legislations Governing Securitisation Definition Enforcement of Security Interest Securitisation & Asset Reconstruction Sub-Prime Mortgage Crisis & Securitisation Change in or Take Over of the Management of the Business of the Borrower Central Registry The Recovery of Debts Due to Banks & Financial Institutions Act, 1993 Applicability Overriding Provision Composition Procedure: (As Per DRT (Procedure) Rules, 1993) Powers of DRT Sick Industrial Companies (Special Provisions) Act (SICA), 1985 & NCLT Provisions Procedure Under SICA Procedure for Listing of References & Miscellaneous Applications in BIFR Procedure for Representation Before BIFR & AAIFR by CBDT Revival & Rehabilitation of Sick Industrial Companies Procedure Before NCLT NCLT & NCLAT Corporate Insolvency/Winding Up Dissolution Without Winding Up Modes of Winding Up Compulsory Winding Up (By the Court) Grounds for Winding Up of Unregistered Companies Commencement of Winding Up Consequences of Winding Up Order (Section 444) Powers of Liquidator (Section 457) Statement of Affairs (Section 439A) Voluntary Winding Up (Section 484) Declaration of Solvency (DoS) To RoC Corporate Restructuring Under Winding Up Contributory Sequence of Payment in Winding Up Fraudulent Preference Disclaimer of Onerous Property Delinquent Persons Committee of Inspection Power of RoC to Strike Defunct Companies Off the Register Cross Border Insolvency Hotchpotch Rule Effective Insolvency and Creditor Rights Systems World Bank Principles IAIR & INSOL Summary of the World Bank Principles Things From Exam Point of View Objectives for Revision