Fundamentals of Financial Management

These are the notes of Fundamentals of Financial Management with course code FIN 133 abided by the syllabus of Pokhara University. . Click on the links below to check out the notes.

Course Contents

Unit I: Financial Management and Its Environment (6 hours)

Nature of financial management; Finance functions; Role of the financial manager; financial goals; Forms of organizations; and an overview of financial institutions and markets.

Unit II: Financial Statements and Analysis (6 hours)

Understanding financial statements: Income statement, Cash flow statement and balance sheet; Common size balance sheet; Ratio analysis: Short-term solvency measures, Long-term solvency
measures, Asset management measures, Profitability measures, Market value measures, The DuPont identity; Use and limitation of financial ratios.

Unit III: Time Value of Money (6 hours)

Concept of time value of money; Present values and discounting; Future values and compounding; Annuities and perpetuities; Effective interest rate and average percentage return; Application of time value of money in hospitality industry.

Unit IV: Raising Capital (7 hours)

Short-term versus long-term capital; Term loan; Bonds: meaning, types, Bond innovation; Preferred stock; Common stock: equity account in balance sheet, Rights and privileges of common stockholders; Cost and benefit of debt versus equity; Methods of selling securities; Initial public offerings; Concept and functions of investment bankers; Concept of venture capital; and concept of lease financing.

Unit V: Cost of Capital (4 hours)

Concept of cost of capital; Component cost of capital: Debt, Preferred stock, Common stock, Retained earnings; Weighted average cost of capital, Application of cost of capital in financial decision making in hospitality industry.

Unit VI: Capital Budgeting (6 hours)

Concept of capital budgeting; Types of projects; Capital budgeting techniques – payback period, NPV, IRR, Comparison of NPV with IRR, and profitability index; and application of capital budgeting techniques.

Unit VII: Capital Structure (4 hours)

Concept of capital structure and financial structure; Setting target capital structure; Factors affecting capital structure; Business risk and financial risk; Operating and financial leverage.

Unit VIII: Dividend Decision (4 hours)

Concept of dividend; Cash dividend versus stock dividend; Dividend payment process; Stock dividend and stock split.

Unit IX: Working Capital Management (5 hours)

Concepts and components of working capital; Importance of working capital management; Types of working; Factors affecting working capital; and working capital flow cycle.

Basic Texts

Ross, S. A., Westerfield, R. W., & Jordan, B. D. Fundamentals of corporate finance. New Delhi: Tata McGraw-Hill.


1. Gapenski, L. C. Healthcare finance: an introduction to accounting and financial management. Chicago: Health Administration Press.
2. Andrew, W. Financial management for hospitality industry. USA: American Hotel and Lodging Association (AHLA).
3. Iyengar, A. Hotel finance. New Delhi: Oxford University Press.
4. Brigham, E. F., & Houston, J. F. Fundamentals of financial management. Singapore: Thomson South-Western.
5. Pradhan, R. S. et al. Fundamentals of financial management. Kathmandu: Buddha Education Publishers.
6. Manandhar, K. D. et al. Fundamentals of financial management. Kathmandu: Khanal Publication.
7. Paudel, R. B., Baral, K. J., Gautam, R. R., & Rana, S. B. Financial management. Kathmandu: Asmita Books Publishers and Distributors.