# Course outline Fundamental Analysis by mikeholy

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```									                              Essentials of Finance for Engineers
Study material
MODULE         Topics/subtopics                             Objective                         Methodology            used
Module I       Financial Statements
1.1 Understanding Financial statements
Balance sheet                                                                 Lecture/discussio
To understand financial                              Financial
Income statement/Profit and Loss Statement                                    n/ caculation on
statements and be able to                        statements of Tata
Fund Flow Statement                                                             worksheet in
interpret the figures in details                         Motors
Cash Flow Statement                                                                 class
Financial functions
1.2 Financial and Profit Analysis
Liquidity ratios                              To calculate financial ratios
Worksheet ,
Leverage ratios                                and intepret them. Using
Calculation on        Financial
Activity ratios                                industry benchmark one
the worksheet    statements of Tata
Profitability ratios                          should be able to asses the
Motors
Utility of ratio analysis                                 firm
Module 2       Valuation I
Time value of money
Compounding                                                                                          Tables for
Calculation of time value of     Lecture/problem
Discounting                                                                                       calculating time
money, IRR                    solving
Present value of cash flow                                                                             value
Future value of money
Calculation of rate of return
Internal rate of return (IRR)
Module 3       Capital budgeting decisions
Investment decisions
NPV Vs IRR                                     To prepare capital budget        Case Method      Cases / Worksheet
Discounted payback period
Modified internal rate of return (MIRR)
Profitability Index
Module 4       Beta estimation
Beta: Introduction                                                                                Data from NSE/
To calculate beta of a stock     Problem solving
Estimation method                                                                                   Worksheet
Determinants of Beta
Module 5       Cost of equity
Risk free rate
To calculate cost of equity       Case method            Cases
CAPM : Introduction
Calculation of cost of equity
Module 6       Cost of capital
Problem
Components of capital                        To calculate cost of capital of
solving/case    Cases/ Worksheet
Cost of debt                                             a firm
method
Cost of equity (Revision)
Weighted average cost of capital (WACC)
Module 7       Leverage
To calculate different types         Problem
Capital structure: Introduction
leverage of a firm and their       solving/case    Cases / Worksheet
Financial leverage
use for capital structure          method
Operating leverage
Combined leverage
Module 8       Capital structure: Theory and policy
Net Income based view                          To understand theory for
Lecture           Fact sheet
MM Hypothesis                                  capital structure of a firm
Pecking order theory
Module 9       Working Capital Management                    To understand, calculate and
Working capital: Introduction                intrepret operating cycle, cash Lecture / Problem
Worksheet
Operating cycle                                conversion cycle. Calculate        Solving
Cash conversion cycle                         and manage working capital.
Calculation of working capital
Cash Management
Inventory Management
Module 10        Capital markets in India
Introduction                                       To provide overview of           Lecture /
Fact sheet
Regulatory bodies                                  capital market in india         discussion
Investment bank
Other intermediries
Module 11        Stock market
To calculate market index,
Stock market index (NIFTY,SENSEX)                                            Lecture/ Problem         Fact sheet
impact cost, and incorporate
Market base                                                                      solving             /Worksheet
changes in market base
Change in market base
Security selection for index
Impact cost
Calculation of index
Adjustment in market base due to new security
Module 12        Raising equity capital
12.1 Authorised capital                                                                                     Financial
Understanding different value       Lecture /
subscribed capital                                                                                statements of Tata
of a stock                discussion
Paid up capital                                                                                         Motors
Ordinary shares
Preference shares
Book value of share
Face value of share
Market value of share
12.2 Initial Public Offering (IPO)
To understand IPO process          lecture /     Prospectus of IPO
Allocation of shares
and its pricing              Discussion     (Reliance power)
Pricing IPO
12.3 Right issue
lecture /      Financial news
Bonus shares                                       To understand different
Discussion          items
Stock split                                         treatments of stocks
Reverse stock split
Module 13        Raising debt capital                                                                lecture /
Fact sheet
Bonds                                                                              discussion
Overview of bonds, debenture
Debentures
Warrants
Convertible debentures/bonds
Module 14        Valuation II                                                                    Lecture/problem      fact sheet/
valuation methods for bonds
Valution of bonds                                                                   solving          worksheet
and shares
Valuation of shares
Module 15        Dividend theory
Dividend policy                                                                     Lecture /
Fact sheet
Walter's model                                  Overview of dividend policy        discussion
Gordon's model
Module 16        Mutual Fund                                                                     Lecture / problem worksheet / data
Overview of Mutual fund,
Introduction                                                                         solving       form HDFC
NAV calculation
NAV calculation
Calculation of return
Module 17        Security analysis                                                                                 Financial
Technical analysis                              Overview of fundamental and                     statements of
Lecture /Cases
Fundamental analysis                                 technical analysis                        TATA Motors/
Module 18        Portfolio management                                                          Lecture method / Data from NSE/
Understanding risk and return
Risk and Return                                                               problem solving    Worksheet
Module 19        Financial derivatives                             Understanding financial        Lecture /
Worksheet
Forward                                            derivative instruments       Discussion
Future
Option