CAP-II SYLLABUS

Syllabus of Financial Management

Financial Management is the fourth paper of CAP-II. It covers 100 marks in total. It is the Group 2 paper. The syllabus you need to cover in CAP-II under “Financial Management” is as follow:

Level of Knowledge : Working

Course objectives

— Develop knowledge and understanding of financial management methods for analyzing the various sources of finance and

— Capital investment opportunities and application of various tools and techniques for business planning and control.

Course contents

Introduction and Fundamental Concepts of Financial Management

  • An overview of financial management
  • Functions and objectives of financial management
  • Financial environment: markets, institutions, and interest rates; risk and return: the basics, time value of money

Strategic Finance and Policy

  • Capital structure: introduction, shareholders’ funds, methods of raising equity finance, long-term debt finance
  • Operating and financial gearing, gearing and the required return,
  • Cost of equity and debt capital, overall cost of capital, Financial distress, signaling and agency costs.

Analysis of Financial Statements

  • Overview, financial statement analysis and its precautions
  • Horizontal analysis, vertical analysis, ratio analysis
  • DuPont analysis, Cash flow analysis, analysis reporting

Valuation of Securities

  • Fixed income securities – characteristics and valuation
  • Common stock- characteristics, valuation and issuance, Hybrid securities-characteristics

Capital Investment Decision

  • Concepts of cost of project
  • Capital budgeting, evaluating cash flows, cash flow estimation
  • Investment evaluation and capital rationing

Working Capital Management and Financial Forecasting

  • Financial forecasting and working capital policy
  • Short-term finance, management of cash and marketable securities, management of accounts receivables, Short-term and long-term funding alternatives.

Distribution Policy

  • Dividend decision: strategic and legal dimensions of dividend, theory of dividend and retention policy

Overview of Capital Market

  • Primary and secondary market
  • Dematerialization, CDS, stock exchange, commodities exchange and regulatory framework, mutual fund, International capital market

Investment opportunities in Nepalese Capital Market

  • Key factors and indicators to be considered before making investment in capital market
  • IPO & secondary market
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