Tribhuvan University
Faculty of Management
Office of the Dean
Bachelor of Business Administration in Finance (BBA-F)
Course Description
:This course provides the fundamentals of small and medium enterprise and social enterprise finance. It begins with introduction of SMEs and social enterprises. It covers SME project idea generation, market and technical analysis, financial estimates and projections of SMEs, project risk analysis, managing current assets, financing SMEs. It also covers financial management of social enterprises. Course Learning Outcomes On completion of this course the students will be able to: Explain how financial management in SMEs differs from financial management in a corporation; Explain the financial managers’ responsibilities in SMEs; Analyze market, demand and technical aspect of SME project ideas; Estimate cash flows of investment decision and evaluate investment decision; Analyze project risk; Manage current assets of a firm; Identify and evaluate sources of SME financing; Apply the principles and tools of financial management in social enterprises.
Course Objective
:The purpose of this course is to provide the students the understanding of the small and medium enterprise and social enterprise financing. The course also aims at providing necessary skill to students to analyze SME projects and make necessary arrangement of financial resources for SMEs and social enterprises. Course Description This course provides the fundamentals of small and medium enterprise and social enterprise finance. It begins with introduction of SMEs and social enterprises. It covers SME project idea generation, market and technical analysis, financial estimates and projections of SMEs, project risk analysis, managing current assets, financing SMEs. It also covers financial management of social enterprises. Course Learning Outcomes On completion of this course the students will be able to: Explain how financial management in SMEs differs from financial management in a corporation; Explain the financial managers’ responsibilities in SMEs; Analyze market, demand and technical aspect of SME project ideas; Estimate cash flows of investment decision and evaluate investment decision; Analyze project risk; Manage current assets of a firm; Identify and evaluate sources of SME financing; Apply the principles and tools of financial management in social enterprises.
Course Contents:
Lecture hours show the approximate classroom time allocated to each unit.
Unit 1. Introduction
- Overview of financial management
- Characteristics of SMEs
- Comparison of financial management in SMEs and corporation
- Financial managers’ responsibilities in SMEs
- Concept and characteristic of social enterprises
- Objectives of social enterprises.
Unit 2. Generation and Screening of SME Project Ideas
- Generation of ideas
- Monitoring the environment
- Corporate appraisal
- Identifying investment opportunities
- Scouting for project ideas
- Preliminary screening.
Unit 3. Market, Demand and Technical Analysis
- Importance of market and demand analysis, collection of secondary data/information, analysis of market survey, demand forecasting, uncertainties in demand foreca sting
- Importance of technical analysis, Technical arrangement, components of technical analysis.
Unit 4. Financial Estimates, Projections and Investment Decision
- Cost of project
- Estimates of sales and production
- Cost of production
- Working capi tal requirement
- Elements of cash flow, Basic principles of cash flow estimation
- Estimation of cash flows
- Cost of capital
- Investment decision criteria: payback period, discounted payback period, net present value and internal rate of return.
Unit 5. Risk Analysis of SMEs
- Sources, measure and perspective on risk
- Using break -even analysis for risk assessment
- Sensitivity analysis
- Scenario analysis
- Managing risk.
Unit 6. Managing Current Assets in SMEs
- Cash management: Significance of cash management
- Increasing the efficiency of cash management
- Cash budget. Receivable management : Significance of receivable management
- Costs of maintaining receivables
- Analyzing the changes in the credit policy variables. Inventory management: Components of inventory
- Significance of inventory management
- Inventory costs
- Determining optimal level of inventory
- Inventory control system: ABC system
- JIT system.
Unit 7. Financing of SMEs
- Financial structure of SMEs
- Short-term sources of financing: accruals, trade credit, short- term bank loans
- Long-term sources of financing: debt and equity financing
- Pros and cons of debt and equity financing from SMEs perspective.
Unit 8. Financial Management in Social Enterprises
- Finance functions in social enterprises
- Investment opportunities and social welfare
- Financing social enterprises
- New approaches and innovations in financing: loan guarantee, quasi-equity debt, pooling, social impact bond.
- Basic Books Chandra, P. Projects: Planning, Analysis, Selection, Financing, Implementation, and Review .
- New Delhi: McGraw Hill Education.
- Kaili, E., Psarraikis, D., & Hoinaru, R. V. New Models of Financing and Financial Reporting for European SMEs- A practioner’s View. Cham: Palgrave Macmillan.
Suggested Readings:
Van Horne, J.C., Wachowicz, JR., & Bhaduri, S. N. Fundamentals of Financial Management. New Delhi: Prentice Hall India Ltd. Etichart, N., & Comilli, L. Social Enterprise in Emerging Market Countries . New York: Palgrave Macmillan. Bugg-Levine, A, Kogut, B., & Kulatilaka, N. A New Approach to Funding Social Enterprises (Harvard Business Review, Jan -Feb. 2012).