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syllabus of S5 Strategic Financial Management

Syllabus GRID:

Here is the grid for Syllabus of S5 Strategic Financial Management.

1.    Objectives of organizations
2.    Constraints on Financial Strategy
3.    Forecasting and Analysis
4.    Financial Strategies
5.    Equity finance
6.    Debt finance
7.    Leasing
8.    The cost of capital
9.    The capital structure
10.   Treasury Management
11.   Investment appraisal techniques
12.   International investment
13.   Specific investment appraisal scenarios
14.   Control of investment projects
15.   Business valuations
16.   Amalgamations and restructuring

Detailed Syllabus Contents:

The detailed Syllabus of Strategic Financial Management for upcoming attempt is given below.



1. Objectives of organizations

  • Objectives of Companies
  • Stakeholders and Objectives
  • Objectives of public owned
  • Objectives of non‐commercial bodies

2. Constraints on Financial Strategy

  • Constraint Factors
  • Economic Constraints
  • International Constraints
  • Regulatory bodies

3. Forecasting and Analysis

  • Performance Analysis                   

o Calculation of ratios including DuPont

approach and Z-Score.

  • Cash Forecasts

o Preparation of Cash Budget only

  • Financial Statements Forecast

o Budgeted Income statement

o Budgeted Balance sheet

  • Sensitivity Analysis and Changes in variables

o Concept of sensitivity Analysis in all of the above Forecasted statements and calculation of revised cash budget.

4. Financial Strategies

  • Working Capital Management

o Working capital needs(temporary and permanent need) and working capital financing strategies (aggressive, conservative and moderate strategy)

  • Dividend Policy

o Traditional theory of dividend Policy

o MM theory of Dividend Policy

o Dividend irrelevancy theory

o Factors affecting dividend policy

o Dividend signaling

o Dividend stability

o Other Dividend Policies: constant D/P, constant DPS, residual , zero etc

o Stock Dividend and Stock Splits

o Share buy back



5. Equity finance

  • Capital Markets

o Primary and Secondary market

o Concept of Initial Public offer, underwriting and placing

 Rights Issues

o Concept of right issue and its impact of right issue on wealth of shareholder

  • Scrip Dividends, Bonus Issues and Share Splits
  • Share Prices and Investment Returns
  • Efficient Market Hypothesis (types of market efficiency i.e. weak, semi strong and strong)

6. Debt finance

  • Medium Term Finance
  • Long Term Debt
  • Convertible Securities
  • Warrants
  • International Debt Finance
  • valuation of Perpetual bounds, Zero coupon bonds, Bonds with definite maturity, Deep discount bonds
  • concept of KIBOR and LIBOR
  • Treasury securities
  • Yield curb (Term structure of interest rates)
  • Bond price behavior such as price/yield relationship
  • Callable and put able bonds

7. Leasing

  • Operating VS financial lease
  • Amortization
  • Leasing as a Source of Finance
  • Lease or Buy decision

8. The cost of capital

  • Concept of Cost of capital, optimum cost of capital and its theories
  • Cost of Equity

o Dividend Valuation Model Without growth and with growth


 Cost of debt(All types of Debts)

 Cost of preference shares (redeemable, irredeemable, convertible)

  • Weighted average cost of capital

o Calculation of weighted average cost of capital (WACC)

  • Project Specific Cost of Capital

o Concept of leverage, Business Risk and financial Risk and calculation of Asset beta and Equity beta.

o Calculation of Risk adjusted WACC of a single business

o Calculation of Risk adjusted WACC of a combined business (Only two businesses combined)

9. The capital structure

  • Capital Structure decision

o Concept of capital structure and optimum capital structure

  • Effect of Capital Structure on ratios
  • Theories of Capital Structure

o Traditional theory of capital structure

o MM theory without tax

o MM theory with tax

10. Treasury Management

  • Treasury Functions

o Roles and responsibilities of a treasury department

  • Concepts of Foreign currency and domestic currency, FX exchange rate understanding Bid/Buying rates and Ask/Offer/Selling rates in Direct and Indirect Quoting.
  • Risk and Reward

o Assessment of Risk associated with dealings in Foreign currency

  • Hedging for foreign currency Risk

o Invoice in home currency

o Leading and lagging

o Netting / Matching assets and liabilities

o Forward rate agreement and contracts

o Money market hedging

o Currency options (Basic concept and basic calculations)

o Currency futures (Basic concept and basic calculations)

o Currency swaps (Basic concept and basic calculations)



11. Investment appraisal techniques

  • Capital Investment Appraisal

o Concept of Capital investment and its appraisal

o Non Discounted Techniques

  • Accounting rate of return
  • Payback period

o Discounted Techniques

  • NPV Calculation of NPV by preparing operating cash flows and adjusting for inflation and taxation.
  • Discounted payback period
  • Profitability index
  • Dealing with assets of unequal lives

o Equivalent Annual Benefit (EAB)

o Equivalent annual Cost (EAC)

  • Risk and Uncertainty

o Sensitivity analysis in Capital investment appraisal

o Concept and application of expected values in calculation of NPV

12. International investment

  • International Investment: Basis and Risk
  • International Investment: Appraisal

o Calculation of NPV for international projects

  • Purchasing power parity
  • International fisher effect
  • Interest rate parity
  • Appreciation and depreciation of currency
  • Further risks / exposure in international investment

13. Specific investment appraisal scenarios

  • Capital Rationing
  • De-merger including exit strategies

o Single period capital Rationing. Calculation of optimum investment mix under both assumptions that projects can be divisible and indivisible.

o Concept of soft and hard capital rationing and reasons of these.

 Dealing with assets of unequal lives and Asset replacement cycle decision

o Calculation of Equivalent Annual Benefit (EAB)

o Calculation of Equivalent Annual Cost (EAC)

 Real Options Black Scholes Model – Introduction  

 Adjusted Present Value

o Concept of APV and when to calculate APV in capital investment appraisal

o Calculation of APV

o APV in case of Subsidized or cheap loan

14. Control of investment projects

  • Investments and Projects
  • Feasibility Study
  • Project Control
  • Investment Performance
  • Post‐Completion Audits

15. Business valuations

  • Reasons for Valuations
  • Asset Valuation bases
  • Earning Valuation bases
  • Dividend Valuation bases
  • Cash Flow Valuation Method
  • Calculation of Economic value added (EVA) and Market value added (MVA)
  • Valuation of intangible assets CIV approach
  • Valuation issues

16. Amalgamations and restructuring

  • Mergers and Acquisitions (Types of mergers / integration, Types of synergies in merges)
  • Conduct of a takeover
  • Payment Methods
  • Valuation of Mergers and Amalgamations
  • Regulation of Acquisitions
  • Post‐acquisition integration
  • Impact of mergers and acquisition on stakeholders
  • Bootstrapping
  • Impact on combined EPS after merger
  • Defense mechanisms     


syllabus of S5 Strategic Financial Management syllabus of S5 Strategic Financial Management syllabus of S5 Strategic Financial Management syllabus of S5 Strategic Financial Management syllabus of S5 Strategic Financial Management syllabus of S5 Strategic Financial Management syllabus of S5 Strategic Financial Management syllabus of S5 Strategic Financial Management

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