Table Of Content

Government of Karnataka TRAINING MODULE ON CORPORATE FINANCE MANAGEMENT [Non-DLM] [ 20 days Training Module in two phases of 10 days each – Refined after the validation proceedings] With support from Department of Personnel & Training, Government of India and UNDP ADMINISTRATIVE TRAINING INSTITUTE Lalitha Mahal Road, Mysore – 570 011 1 CONTENTS Sl. Particulars Page No. No. I Training Module on Corporate Finance Management 3-36 [20 days Training Module with Schedule with two phases of 10days each] FIRST PHASE (10 DAYS) 1 Basics of Commercial Accounting and Balance Sheet 37-81 2 Discounted Cash Flow Technique and Internal Rate of Return 82-109 3 Budget: a) Performance budgeting 110-150 b) Zero Base Budgeting c) Cost-Benefit Analysis 4 Capital Management : a) Capital Structure b) Capital budgeting decisions c) Measurement of risk 151-217 d) Cost of Capital including CAP-M e) Valuation of fixed Income Securities f) Valuation of Bonds and Stocks SECOND PHASE (10 DAYS) TRAINING MODULE: 218-231 1 Portfolio Management 232-323 2 Derivatives 324-345 3 International Financial Management 346-470 Note: - Each learning unit contains three portions; (1) Group Activity (2) Reading Material and (3) Instructions to Faculty 2 Aim: Value based investment or expenditure is the essence of the Financial Management. Every suitable financial concept must be analyzed and applied from the viewpoint of each stake holder before final decisions are taken. New financial concepts including derivatives, portfolio management etc., are introduced in this training design in order to enable Financial Managers and Senior Executives to arrive at better alternative investment decisions. Analysis of financial portions of economics will also enable them to draft legislation or improve existing legislation to protect the interest of stake holders and to curb the speculations and malpractices. Therefore, the aim of this training programme is to facilitate practicing Finance Managers from the Finance Department of State Governments and Senior Executives from Administrative Departments to understand and analyze financial statements with a view to taking corporate finance decisions. Training Need There is an ever-increasing need to meet the changing scenario in the management of government departments, local bodies, autonomous bodies and PSUs. The changes are felt from the following angles:- § Public interest § High quality and understandable documentation § Uniform internal and external accounting and financial documentation system § Uniforms internal and external financial rules and regulations § Enforceable global accounting standards. § Transparency in financial information and procedures. § Uniform financial statements from the point of view of effective comparison. § Uniformity in financial reporting system. § Introduction of enforceable penal provisions. § Consultation system to determine high quality solutions. § Quick availability of financial information, to all. Implementation of some of the above ideas may take fairly a long time. But the felt need is to prepare the present financial managers and the senior executives for changes in the system with a view to orienting them to improved levels of efficiency and effectiveness. Phases of Training To achieve the above aims, training is designed in the following 7 Learning Units in two phases. 3 Phase-I 1. Basics of Commercial Accounting System including Balance Sheets; 2. Discounted Cash Flow Technique and Internal Rate of returns. 3. Budget, cost and benefits 3.1 Performance budgeting 3.2 Zero Base Budgeting 3.3 Cost Benefit Analysis 4. Management of Capital 4.1 Capital Structure 4.2 Capital budgeting decisions 4.3 Measurement of risk 4.4 Cost of Capital, including CAP-M 4.5 Valuation of Fixed Income Securities 4.6 Valuation of Bonds and Stocks Phase-II 5. Portfolio Management’ 6. Derivatives 7. International Financial Management Duration 10 days each for each phase of training, totally 20 days. Target Group 1. Officers from the rank of Deputy Controllers and above from the State Accounts Department 2. Selection Scale KAS officers and IAS Officers having 6 to 9 years experience 3. Senior officers from PSUs and autonomous bodies Reading and Activity Materials Reading and group-activity materials on all 7 Learning Units will be supplied to the participants. Groups may concentrate on the meaning and practicality of the concepts, rather than on difficult portions of mathematics and statistics. In addition to the above the participants are expected to borrow books from the library on the various aspects of financial management related to the learning units. 4 Guide to Facilitators/Faculty The Facilitators/Faculty members may use the “Instructions to Faculty” exclusively designed for this package. The time for lecture is limited to the extent noted in the Instructions to Faculty. 80% of time is meant for participants, who will learn on their own through group activities, developed in the form questions and answers. Participants will seek solutions to problems. There will be exercises using case studies. In addition there will be problem solving activities. Participants will also be provided material for reading. They will be exposed to techniques for preparing visual aids for more persuasive and effective presentation. The role of the facilitators will be to guide the participants during group discussion and to moderate the presentations made by each group. 5 Module for Phase-I Day-1 Introductory activities Forenoon Session: Time & Activities/Process Support and Role of Subject Facilitators 10.00- 10.30 Registration at ATI Hostel. am 10.30 to A variety of introductory 11.30 a.m. games are available, including Merry-go-round, Ice Breaking Introductory activities. Potato Partners, Tell a lie. Facilitator may choose from any of these games to establish rapport with the participants. 11.30 - 11.45 Tea/Coffee break am 11.45 am - 12.45 pm Course Faculty/Facilitator to explain the facilities Faculty to explain the Objectives available in the Institute as well as the Library, Sports and Club brief background of the training course facility available in the ATI and spell out the objectives. campus along with the details of the background of Training Faculty may also explain some of the this course. techniques participatory techniques and group Faculty to explain the activities proposed to be used in the advantages of the training process. participatory technique in the form of the Group Group Faculty to also divide participants into Activities. formation four groups based on their experience and background Each group will comprise a mix of executives and finance people. 12.45 - 1.30 Participants to visit library to collect books Faculty and the Chief 6 pm on Financial Management related to Librarian will assist the Corporate Finance. participants in the selection Visit to Faculty will help participants identify of books. library appropriate books and material. . Faculty to also familiarize participants with the contents of the handouts provided for the course. 1.30 - 2.30 Lunch pm Learning Unit - 1 Basics of Commercial Accounting System Including Balance Sheet OBJECTIVES: At the end of this Learning Unit the participants will be able to:- • Classify transactions on the debit side and on the credit side. • Understand important entries in the subsidiary registers. • Prepare Trial Balance • Prepare Trading Account • Prepare Profit and Loss Account • Prepare Balance Sheet • Read balance sheet with some crucial ratios 7 DAY – 1 contd. Learning Unit - 1 Afternoon Session: Time & Activities/Process Support and Role of Subject Facilitators 2.30 p.m. to Commencement of LU-1 Faculty to use the 5.30 p.m. 'Instructions to Faculty' in Brief presentation on the objectives of L.U -1 as guide for the Learning unit LU-1: Basics of Commercial Accounting initial presentation – I and Balance Sheet. Faculty should demonstrate Basics of ‘Story telling’ on starting of business transactions under each Commercial with details of (i) own capital (ii) loan and sub-unit with examples. Accounting transactions related to ‘personal and Balance accounts’, ‘asset accounts’, ‘ Nominal Sheet accounts’, ‘trading and profit and loss account and balance sheet’ summing up of the first day proceedings. 8 DAY – 2 Learning Unit - 1 9.30 to 5.30 Group Activities: pm Recap on the first day proceedings. Before commencement of group activities Faculty to clarify doubts, if Basics of each participant will be provided time to any, with reference to Commercial go through the reading material on LU-1 contents of reading Accounting material. and Balance Group activities will be carried out as per Sheet the instructions in the Handout on “Group Activity LU-1, which will be supplied to Understanding each participant. the contents of reading materials Assignment of frames to The tasks assigned to the 4 groups will be groups as follows Clarify the activities to be undertaken with reference • Group A will deal with frames 1, 2 to each frame and 3 • Group B will deal with frames 4, 5 and 6 • Group C to deal with frame 7 • Group D to deal with frame 8 Frame 1: Questions on Accounts classification Frame 2: Questions on Accounts records Explain the details in each Frame 3: Trial balance: Practicals frame. Frame 4: Trading Account: Practicals Frame details Frame 5: Profit and loss account: Practicals Frame 6: Preparation of Balance Sheet: Practicals Frame 7: How to read Balance Sheet: Practicals Frame 8: Practicals on using ratios and formulas Based on their discussions, groups will Option will be given to the prepare visual aids specific to the frame participants to use any allotted to them for presentation on the medium for presentation, following day. including LCD-Power point Summing up of the proceedings of Day 2 presentation. 9 Day 3 Learning Unit - 1 Forenoon and afternoon Sessions : Time & Activities/Process Support and Role of Subject Facilitators 9.30 a.m. to Recap on the proceedings of the second- 5.30 p.m. day. Basics of Commercial Presentations by participants on LU-1 Moderation by faculty Accounting “Basics of Commercial Accounting and and Balance Balance Sheet” Sheet Presentations by groups Learning Points Listing Learning points on LU-1 Summing up of the proceedings of Day 3. 10