Financial, Treasury and Forex management

CS Final : Group II :: Paper 4: [One paper: Three hours - 100 marks]

Level of Knowledge : Expert knowledge.

Objectives . . .

  1. To provide conceptual clarity about the management tools and techniques used in financial planning, analysis, control and decision making.
  2. To provide knowledge of derivatives, forex and treasury management to enable the candidates to tackle practical situation with ease.

Detailed Contents . . .

  1. Nature and Scope of Financial Management

    Nature, significance, objectives and scope of financial management; risk-return and value of the firm; financial distress and insolvency; financial sector reforms and their impact on financial management; functions of finance executive in an organisation; financial management – recent developments.
  2. Capital Budgeting Decisions

    Planning and control of capital expenditure; capital budgeting process; techniques of
    capital budgeting- discounted and non-discounted cash flow methods, choice of methods; capital rationing; risk evaluation and sensitivity analysis, simulation for risk evaluation; linear programming and capital budgeting decisions.
  3. Capital Structure Decisions

    Meaning and significance of capital structure; capital structure vis-a-vis financial structure; capital structure planning and designing; optimal capital structure; determinants of capital structure; capital structure and valuation - theoretical analysis; EBIT – EPS analysis; cost of capital; factors affecting cost of capital, measurement of cost of capital, weighted average cost of capital, marginal cost of capital; risk and leverage; measures of leverage, leverage effects on shareholders returns.
  4. Sources of Company Finance

    Equity, non-voting preference shares; debentures and bonds; company deposits; term loans from financial institutions and banks; international finance and syndication of loans; euro-issues and external commercial borrowings; internal funds as a source of finance; dividend policy and retention of profits; bonus shares; deferred payment arrangements; corporate taxation and its impact on corporate financing; financing cost escalation.
  5. Dividend Policy

    Introduction; types, determinants and constraints of dividend policy; different dividend theories — Walter’s Model, Gordon’s Model and Modigliani-Miller Hypothesis of dividend irrelevance; forms of dividend; dividend policy - practical considerations and legal constraints; corporate dividend practices in India; statutory framework.
  6. Working Capital Management and Control

    Working capital - meaning, types, determinants; assessment of working capital requirements - operating cycle concept and applications of quantitative techniques; management of working capital - cash, receivables, inventories; financing of working capital; banking norms and macro aspects of working capital management.
  7. Security Analysis and Portfolio Management

    Security analysis - fundamental approach, technical approach and efficient capital market theory; portfolio management - meaning, objectives; portfolio theory – traditional approach; modern approach - CAPM model.
  8. Financial Services

    Meaning, significance and scope of financial services; types of financial services – merchant banking, leasing and hire purchase, venture capital, mutual funds, factoring and forfaiting, securitisation of debt, loan syndication, custodial and corporate advisory services, credit rating; present status of financial services industry in India.
  9. Project Planning and Control

    Project Planning and preparation of project report; project appraisal under normal, inflationary and deflationary conditions; project appraisal by financial institutions – lending policies and appraisal norms by financial institutions; IDBI, IFCI, ICICI, etc; loan documentation and loan syndication, project review and control; social cost and benefit analysis of project.
  10. Derivatives

    Concept of derivatives; financial derivatives and commodity derivatives; types of derivatives – forward contracts, futures contracts, options; participants in futures and options market, stock index futures; derivative markets in India.
  11. Treasury Management

    Meaning, objectives, significance, functions and scope of treasury management; relationship between treasury management and financial management; role and responsibilities of chief finance executive; tools of treasury management; internal treasury controls; environment for treasury management, present status of treasury management in India.
  12. Forex Management

    Nature, significance and scope of forex management; forex manager; foreign exchange market; foreign exchange rates; determinants of foreign exchange rates; exchange rate quotes; types of exchange rates; forex trading; foreign exchange risk exposures and their management; exchange rate forecasting; present status of foreign exchange market in India.
  13. Recent Developments in Financial, Treasury and Forex Management.

  14. Case Studies.



  • Tata McGraw Hill publishing Co. Ltd; New Delhi.
    1. Financial management
      • M.Y. Khan & P.K Jain
    2. Financial Management – theory & problems
      • Prasanna Chandra
  • Vikas publishing House Pvt. Ltd; New Delhi
    1. Financial management (1999)
      • I.M. Pandey
  • Sultan Chand & Sons, Darya Ganj, New Delhi
    1. Financial management – principles & practice
      • S.N . Maheshawari
  • Chaitanya publishing House, Allahabad.
    1. Financial management – An Analytical and Conceptual Approach
      • S.C Kuchhal
  • Prentice Hall of India (P) Ltd; New Delhi
    1. Financial Management & Policy
      • J.C verma
  • West Publishing Company, St. Paul (USA)
    1. Contemporary Financial Markets and services
      • Scott L. William
  • Ammol Publications Pvt. Ltd; 437/4B, Ansari Road, Darya Ganj, New Delhi – 110002.
    1. Financial Management and Policy
      • V.K Bhalla
  • Prentice Hall, Inc; Engleword Cliffds (USA)
    1. Options, Futures and other Derivative Securities
      • John C.Hull
  • Himalaya Publishing House
    1. Treasury Management in India
      • V.A. Avadhani
    2. Financial Futures and Options
      • B. Brahmaiah & P. Subba Rao
  • Black well, 118, Cowley Road, Oxford, U.K
    1. Financial Management
      • Hudson Robert
  • Prentice Hall of India Pvt, Ltd; M – 97, Connaught Circus, New Delhii – 110001
    1. Financial Derivatives – An introduction to Futures, Forwards, Options and Swaps
      • Keith Redhead
  • Academy of Business Students, New Delhi
    1. Foreign Exchange international Finance and Risk Management
      • A.V Rajwade
  • Snowhite, Mumbai
    1. Foreign Exchange Management
      • D.T. Khianani
    2. Foreign Exchange international Risk Management
      • A.V Rajwade


  • Prentice Hall of India (P) Ltd, New Delhi
    1. Financial Decision Making – Concerns Problems and Cases
      • John J. Hampton
  • John Willey & Sons, New York
    1. Principles Preparation Management
      • Benton E. Gup
  • Tata McGraw Hill publishing Co. Ltd, New Delhi
    1. Projects Preparation, Appraisal and Implementation
      • Prasanna Chandra
    2. International Financial Management
      • P.G.Apte
    3. Global Business Finance
      • Prakashm G. Apte
  • Columbia University Press.
    1. The Theory of Financial Management
      • Ezra Soloman
  • United Nations, New Oxford & IBH publishing Co. New Delhi
    1. Guidelines for Project Evaluation
      • P. Dasgupta, A. Sen & S. Marglin
  • Macmillan Publishing Company, New York
    1. International Dimensions of Financial Management
      • Dennis J.O Connor Albert & T. Bueso
  • West Publishing Company, New York
    1. Portfolio Construction, Management and Protection
      • Robert A. strong
    2. Contemporary Financial Management
      • R. Charles Moyer, James R. McGuigan & William J. Kresow
  • Wadhwa and Co. Pvt, Ltd; Nagpur
    1. Lease Financing and Hire purchase, Nerchan Banking, Mutual Funds, Factoring and Venture Capital
      • Kothan Vinod

Journals, Reports etc.

  • RBI Publications, Mumbai
    1. RBI Bulletin
    2. RBI Annual Report (latest)
    3. Reportcum Currency and Finance (latest)
  • The world Bank Headquarters, Washington, U.S.A
    1. The world Bank Annual Report (latest)
  • Government of India Publication, New Delhi
    1. Economic Survey (latest)
    2. Annual Report, Govt. of India, Ministry of Finance
  • Report of the working Group, Reserve Bank of India
    1. Guidelines issued byVarious Financial institutions; Appransal of Term – loans
  • The journal of American Finance Association, New York.
    1. Journal of Finance
    2. Financial and Economic Dailies

Other Relevant Books

Author Credit : Team Future Accountant

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