MFM 104 Financial Management Notes cover all four units of the GGSIPU MBA (Financial Management) Semester 2 core paper. The printed English notes book is listed as 55 pages and includes 45 solved illustrations, 58 exam-style questions and Excel functions in every unit. Topics include financial objectives, time value of money, capital structure, leverage, capital budgeting, dividend policy and working capital management. The notes follow the MBA (FM) scheme labelled 2021-22 onwards.
Written by Prateek Talwar, Founder, Unnati Educations · Reviewed by Prateek Talwar, Associate Company Secretary (ACS), ICSI · Checked against the MBA (Financial Management) Scheme and Syllabus, 2021-22 onwards · Updated 14 October 2026 · Editorial policy
Scheme: MBA (FM) scheme 2021-22 onwards | Applies to: batches admitted from 2021-22 onwards | Verified against: MBA (Financial Management) Scheme and Syllabus
MFM 104 Financial Management at a glance: GGSIPU MBA (FM) Sem 2 credits, units and exam pattern
MFM 104 is identified as one of six core papers in MBA (Financial Management) Semester 2, with 42 lecture hours. The supplied semester plan places it alongside eight other Semester 2 papers.
| Code and title | MFM 104 Financial Management (MFM-104 on the notes cover) |
|---|---|
| Course and semester | MBA (Financial Management), Semester 2 |
| Category and credits | Core, 3 credits; L-3, with no tutorial or practical shown |
| Marks | 100: 25 internal (15-mark class test and 10 marks for other assessment activities) + 75 end-term |
| Pass mark | Not specified in the supplied scheme details; refer to GGSIPU Ordinance 11 for applicable examination rules |
| Applies to | Batches admitted from 2021-22 onwards under the stated scheme |
| End-term pattern | 75 marks; question-paper pattern not specified in the supplied syllabus details |
| Units and hours | Financial Objectives (10), Capital Structure (10), Capital Budgeting (10), Dividend Policy (12): 42 teaching hours |
| Paired lab | None |
The syllabus calls for MS-Excel functions across the topics, and the notes include an Excel table in each unit. Unit 4 has the highest teaching-hour allocation at 12 hours.
MFM 104 Financial Management Notes unit-wise: 45 solved illustrations and 58 exam questions across 4 units
The notes follow the four official unit titles and cover financial calculations, financing decisions, investment appraisal and dividend and working capital decisions. The identified unit pages run from page 4 through page 54.
MFM 104 Unit 1: Financial Objectives
Unit 1 (pages 4 to 19) covers financial objectives, wealth maximisation, the agency problem, financial and economic environments, time value of money, annuities, EMI calculations, pension funds, funds flow analysis and AS-3 cash flow statements. It contains 13 solved illustrations and 15 exam-style questions.
| Month | EMI (₹) | Interest at 0.75% (₹) | Principal (₹) |
|---|---|---|---|
| 1 | 20,758.36 | 7,500.00 | 13,258.36 |
| 2 | 20,758.36 | 7,400.56 | 13,357.79 |
| 3 | 20,758.36 | 7,300.38 | 13,457.98 |
Quick look: first three EMIs on a ₹10,00,000 loan at 9% annually for five years (from page 11)
- Month
- 1
- EMI (₹)
- 20,758.36
- Interest at 0.75% (₹)
- 7,500.00
- Principal (₹)
- 13,258.36
- Month
- 2
- EMI (₹)
- 20,758.36
- Interest at 0.75% (₹)
- 7,400.56
- Principal (₹)
- 13,357.79
- Month
- 3
- EMI (₹)
- 20,758.36
- Interest at 0.75% (₹)
- 7,300.38
- Principal (₹)
- 13,457.98
The EMI uses a monthly interest rate of 9% ÷ 12 = 0.75% and 60 monthly instalments. Displayed values are rounded to two decimal places.
MFM 104 Unit 2: Capital Structure
Unit 2 (pages 20 to 32) covers the Net Income, Net Operating Income, Traditional and Modigliani-Miller approaches, including arbitrage and corporate tax. It also explains the cost of capital, WACC using book and market weights, operating and financial leverage, combined leverage, EBIT-EPS indifference points and capital gearing. It contains 14 solved illustrations, the highest count among the four units, and 14 exam-style questions.
| Measure | Working | Result |
|---|---|---|
| Degree of operating leverage (DOL) | Contribution ₹2,00,000 ÷ EBIT ₹1,20,000 | 1.67 |
| Degree of financial leverage (DFL) | EBIT ₹1,20,000 ÷ EBT ₹80,000 | 1.50 |
| Degree of combined leverage (DCL) | Contribution ₹2,00,000 ÷ EBT ₹80,000 | 2.50 |
Quick look: operating, financial and combined leverage (from page 28)
- Measure
- Degree of operating leverage (DOL)
- Working
- Contribution ₹2,00,000 ÷ EBIT ₹1,20,000
- Result
- 1.67
- Measure
- Degree of financial leverage (DFL)
- Working
- EBIT ₹1,20,000 ÷ EBT ₹80,000
- Result
- 1.50
- Measure
- Degree of combined leverage (DCL)
- Working
- Contribution ₹2,00,000 ÷ EBT ₹80,000
- Result
- 2.50
At the stated operating point, DCL of 2.50 implies that a 10% sales increase would produce approximately a 25% increase in EPS under the simplified constant-cost and financing assumptions. The exact multiplication uses unrounded leverage ratios.
MFM 104 Unit 3: Capital Budgeting
Unit 3 (pages 33 to 42) covers conventional and discounted cash flow appraisal methods. A ₹5,00,000 project is evaluated through seven appraisal methods. The unit also explains certainty equivalents, risk-adjusted discount rates, decision trees, Hillier's independent and dependent cash flow analysis, sensitivity analysis and replacement decisions. It contains 8 solved illustrations and 14 exam-style questions.
| Technique | Reported result | Decision rule |
|---|---|---|
| Payback period | 3.07 years | Accept if within the specified target period |
| Net present value (NPV) | ₹73,964 | Accept because NPV is positive |
| Internal rate of return (IRR) | 15.82% | Accept because IRR exceeds the 10% hurdle rate |
| Modified internal rate of return (MIRR) | 13.08% | Accept because MIRR exceeds the 10% hurdle rate, using the stated reinvestment and financing assumptions |
Quick look: reported appraisal results for a ₹5,00,000 project at a 10% discount rate (from page 36)
- Technique
- Payback period
- Reported result
- 3.07 years
- Decision rule
- Accept if within the specified target period
- Technique
- Net present value (NPV)
- Reported result
- ₹73,964
- Decision rule
- Accept because NPV is positive
- Technique
- Internal rate of return (IRR)
- Reported result
- 15.82%
- Decision rule
- Accept because IRR exceeds the 10% hurdle rate
- Technique
- Modified internal rate of return (MIRR)
- Reported result
- 13.08%
- Decision rule
- Accept because MIRR exceeds the 10% hurdle rate, using the stated reinvestment and financing assumptions
These results are reproduced from the supplied editorial record. The underlying year-wise project cash flows were not supplied for independent recalculation.
MFM 104 Unit 4: Dividend Policy
Unit 4 (pages 43 to 54) covers the Walter, Gordon, Modigliani-Miller and Lintner dividend models. It then explains the working capital operating cycle, financing approaches, working capital estimation, economic order quantity, stock levels, Baumol and Miller-Orr cash models and credit policy evaluation. It contains 10 solved illustrations and 15 exam-style questions.
| Item | Calculation | Result |
|---|---|---|
| Economic order quantity | √(2 × 40,000 × 500 ÷ 10) | 2,000 units |
| Orders per year | 40,000 ÷ 2,000 | 20 |
| Annual ordering cost | 20 × ₹500 | ₹10,000 |
| Annual carrying cost | (2,000 ÷ 2) × ₹10 | ₹10,000 |
Quick look: EOQ for annual demand of 40,000 units, ordering cost ₹500 and carrying cost ₹10 per unit per year (from page 50)
- Item
- Economic order quantity
- Calculation
- √(2 × 40,000 × 500 ÷ 10)
- Result
- 2,000 units
- Item
- Orders per year
- Calculation
- 40,000 ÷ 2,000
- Result
- 20
- Item
- Annual ordering cost
- Calculation
- 20 × ₹500
- Result
- ₹10,000
- Item
- Annual carrying cost
- Calculation
- (2,000 ÷ 2) × ₹10
- Result
- ₹10,000
At EOQ, annual ordering cost equals annual carrying cost under the basic constant-demand inventory model.
MFM 104 exam corner: 32 short-answer and 26 long-answer questions by unit
Each unit ends with important exam questions divided into short-answer questions (2–5 marks) and long-answer questions (10–15 marks). These are practice-question categories in the notes, not a confirmed university question-paper pattern.
| Unit | Short-answer questions | Long-answer questions | Solved illustrations |
|---|---|---|---|
| Unit 1: Financial Objectives | 8 | 7 | 13 |
| Unit 2: Capital Structure | 8 | 6 | 14 |
| Unit 3: Capital Budgeting | 8 | 6 | 8 |
| Unit 4: Dividend Policy | 8 | 7 | 10 |
| Total | 32 | 26 | 45 |
MFM 104 exam questions and solved illustrations per unit
- Unit
- Unit 1: Financial Objectives
- Short-answer questions
- 8
- Long-answer questions
- 7
- Solved illustrations
- 13
- Unit
- Unit 2: Capital Structure
- Short-answer questions
- 8
- Long-answer questions
- 6
- Solved illustrations
- 14
- Unit
- Unit 3: Capital Budgeting
- Short-answer questions
- 8
- Long-answer questions
- 6
- Solved illustrations
- 8
- Unit
- Unit 4: Dividend Policy
- Short-answer questions
- 8
- Long-answer questions
- 7
- Solved illustrations
- 10
- Unit
- Total
- Short-answer questions
- 32
- Long-answer questions
- 26
- Solved illustrations
- 45
Total: 58 exam-style questions (32 short-answer + 26 long-answer) and 45 solved illustrations across four units.
One question per unit, with answer pointers:
- Unit 1: Calculate the EMI on a ₹30,00,000 home loan at 8.5% annual interest for 20 years. Pointer: Use a monthly rate of 8.5% ÷ 12 and 240 monthly instalments. The EMI is approximately ₹26,034.70.
- Unit 2: Calculate the cost of equity when D0 = ₹2, growth is 5% and P0 = ₹42. Pointer: D1 = ₹2.10; Ke = (2.10 ÷ 42) + 0.05 = 10%.
- Unit 3: A ₹2,00,000 project provides annual cash flows after tax of ₹60,000 for five years. Find payback, NPV at 10%, PI and IRR. Pointer: Payback is 3.33 years; NPV is approximately ₹27,447; PI is approximately 1.137. The source reports IRR as 15.24%, which requires correction before publication.
- Unit 4: What are the five Cs of credit? Pointer: Character, capacity, capital, collateral and conditions.
Additional important questions are planned for a separate MFM 104 page.
Who writes and checks the MFM 104 finance notes?
- Prateek Talwar, author: Founder, Unnati Educations; Associate Company Secretary (ACS), ICSI, membership no. 58704, since 15 May 2019; B.Com, University of Delhi (School of Open Learning), 2012. Author profile
Prateek Talwar is also identified as the subject reviewer. The supplied editorial record states that the 2026–27 edition matches its topics to the four units of the MBA (FM) scheme and includes Excel formulas alongside time value of money and capital budgeting illustrations.
Last updated 14 October 2026. See the editorial policy for information about editorial review and corrections.
The same team prepares GGSIPU important questions for supported courses.
How to write MFM 104 answers: working tables, decision rules and ten-to-fifteen-mark theory answers
For capital budgeting numericals, prepare a working table with year, cash flow after tax, present value factor, present value and cumulative present value. Use the same working to calculate NPV, profitability index and discounted payback where applicable. State the decision rule after the calculation rather than presenting only a final figure.
For the Traditional approach to capital structure, explain the relationship between leverage and the overall cost of capital, then draw the U-shaped cost curve with the minimum point representing the theoretical optimum. For Walter and Gordon dividend models, write the formulas and define the assumptions, including the relationship between the return on investment and the cost of equity.
For cash flow statements, show working notes and reconcile opening cash plus net change with closing cash. Apply the relevant AS-3 classification consistently. For working capital estimates, distinguish cost-based and selling-price-based debtors and exclude depreciation from cash operating cost calculations.
Worked example: Replacement decision using equivalent annual cost (page 41)
- Machine X: Initial cost ₹1,00,000, useful life 3 years and annual running cost ₹20,000.
- Machine Y: Initial cost ₹1,50,000, useful life 5 years and annual running cost ₹18,000.
- Discount rate: 10%; present value annuity factors are approximately 2.4869 for 3 years and 3.7908 for 5 years.
- Machine X equivalent annual cost: ₹1,00,000 ÷ 2.4869 + ₹20,000 = approximately ₹60,211.
- Machine Y equivalent annual cost: ₹1,50,000 ÷ 3.7908 + ₹18,000 = approximately ₹57,569.
- Decision: Choose Machine Y because its equivalent annual cost is lower, assuming the machines provide equivalent services and the stated cost assumptions apply.
Excel check for Machine X: =PMT(10%,3,-100000)+20000. The same approach can be applied to Machine Y using five periods, ₹1,50,000 and ₹18,000 annual running cost.
For longer theory answers, use a consistent structure: definition, assumptions, formula or diagram, short application, merits and limitations.
MFM 104 and the GGSIPU MBA (FM) Sem 2 papers it connects to
Paired lab: None. MFM 104 is identified as a theory-only core paper, with Excel practice included within its notes.
- MFM 110 Investment Analysis and Portfolio Management: CAPM and dividend growth in Unit 2 (page 26).
- MFM 102 Corporate Social Responsibility and Corporate Governance: The agency problem in Unit 1 (page 6).
- MFM 106 Business Research: Expected NPV and standard deviation in Hillier's risk analysis (Unit 3, page 39).
- MFM 108 Sustainable Operations Management: EOQ and stock-level calculations in Unit 4 (page 50).
| Group | Papers |
|---|---|
| Governance and research | MFM 102 Corporate Social Responsibility and Corporate Governance; MFM 106 Business Research |
| Operations and investment | MFM 108 Sustainable Operations Management; MFM 110 Investment Analysis and Portfolio Management |
| Human resources and project work | MFM 112 Human Resource Management; MFM 114 Minor Project |
| Skills and electives | MFM 116 Professional Skill Development (NUES); MFM 118 MOOC/Open Elective |
Other MBA (Financial Management) Semester 2 papers in the supplied scheme
- Group
- Governance and research
- Papers
- MFM 102 Corporate Social Responsibility and Corporate Governance; MFM 106 Business Research
- Group
- Operations and investment
- Papers
- MFM 108 Sustainable Operations Management; MFM 110 Investment Analysis and Portfolio Management
- Group
- Human resources and project work
- Papers
- MFM 112 Human Resource Management; MFM 114 Minor Project
- Group
- Skills and electives
- Papers
- MFM 116 Professional Skill Development (NUES); MFM 118 MOOC/Open Elective
Walter model of dividend policy in financial management: excerpt from page 44 of the MFM 104 notes
Excerpt from page 44
Prof. James E. Walter argued that dividend policy is relevant and that its effect on share price depends on how the firm's internal rate of return (r) compares with its cost of capital (k).
Assumptions
- All financing comes from retained earnings; no new debt or equity is raised.
- The rates r and k remain constant.
- Earnings are distributed as dividends or retained for investment.
- Earnings per share and dividends per share are treated as constant under a given policy, and the firm has a perpetual life.
Formula
P = [D + (r ÷ k)(E − D)] ÷ k, where P is the market price per share, D is dividend per share, E is earnings per share, r is the return on investment and k is the cost of equity.
| Type of firm | Relationship | Optimum payout |
|---|---|---|
| Growth firm | r > k | 0% payout under the model's assumptions; retain earnings for higher-return investment |
| Normal firm | r = k | Dividend policy is irrelevant to share value under the model |
| Declining firm | r < k | 100% payout under the model's assumptions |
Walter model: optimum payout by type of firm (page 44)
- Type of firm
- Growth firm
- Relationship
- r > k
- Optimum payout
- 0% payout under the model's assumptions; retain earnings for higher-return investment
- Type of firm
- Normal firm
- Relationship
- r = k
- Optimum payout
- Dividend policy is irrelevant to share value under the model
- Type of firm
- Declining firm
- Relationship
- r < k
- Optimum payout
- 100% payout under the model's assumptions
Illustration 1
EPS is ₹10 and the cost of equity is 10%. Find the price per share for r = 15%, 10% and 8%, at dividend payouts of 0%, 40% and 100%.
| Payout | r = 15% (growth) | r = 10% (normal) | r = 8% (declining) |
|---|---|---|---|
| 0% (D = ₹0) | ₹150 | ₹100 | ₹80 |
| 40% (D = ₹4) | ₹130 | ₹100 | ₹88 |
| 100% (D = ₹10) | ₹100 | ₹100 | ₹100 |
Walter model prices for EPS ₹10 and cost of equity 10% (page 44)
- Payout
- 0% (D = ₹0)
- r = 15% (growth)
- ₹150
- r = 10% (normal)
- ₹100
- r = 8% (declining)
- ₹80
- Payout
- 40% (D = ₹4)
- r = 15% (growth)
- ₹130
- r = 10% (normal)
- ₹100
- r = 8% (declining)
- ₹88
- Payout
- 100% (D = ₹10)
- r = 15% (growth)
- ₹100
- r = 10% (normal)
- ₹100
- r = 8% (declining)
- ₹100
Working for r = 15% and D = ₹4: P = [4 + (0.15 ÷ 0.10) × (10 − 4)] ÷ 0.10 = (4 + 9) ÷ 0.10 = ₹130.
Criticism of the Walter model
- It ignores external financing, which may be unrealistic for many firms.
- The assumption of a constant investment return may not hold as investment opportunities change.
- The cost of equity may change with financial and business risk.
- Its optimum policies can imply extreme dividend payout ratios of 0% or 100%.
Do the MFM 104 notes cover the full GGSIPU syllabus?
The supplied editorial mapping identifies notes sections corresponding to all four official MFM 104 units, including Excel functions. This is the source's coverage claim; the complete printed book was not independently checked page by page.
| Official unit | Official topics | Where in the notes | Status |
|---|---|---|---|
| Unit I: Financial Objectives | Financial and economic environment; time value of money, pension funds, EMI, annuity and annuity due; funds flow analysis; cash flow statement (AS-3) | Sections 2–6, pages 4–18 | Mapped |
| Unit II: Capital Structure | NI, NOI, Traditional and MM approaches; cost of capital; operating, financial and combined leverage; EBIT-EPS analysis; capital gearing | Sections 2–6, pages 21–31 | Mapped |
| Unit III: Capital Budgeting | Conventional and discounted cash flow methods; certainty equivalents; risk-adjusted discounting; decision trees; independent and dependent risk analysis; replacement and sensitivity analysis | Sections 2–4, pages 34–41 | Mapped |
| Unit IV: Dividend Policy | Walter, Gordon, MM and Lintner models; working capital approaches and estimation; inventories, cash and receivables | Sections 2–11, pages 44–53 | Mapped |
MFM 104 official units mapped to sections and pages of the notes
- Official unit
- Unit I: Financial Objectives
- Official topics
- Financial and economic environment; time value of money, pension funds, EMI, annuity and annuity due; funds flow analysis; cash flow statement (AS-3)
- Where in the notes
- Sections 2–6, pages 4–18
- Status
- Mapped
- Official unit
- Unit II: Capital Structure
- Official topics
- NI, NOI, Traditional and MM approaches; cost of capital; operating, financial and combined leverage; EBIT-EPS analysis; capital gearing
- Where in the notes
- Sections 2–6, pages 21–31
- Status
- Mapped
- Official unit
- Unit III: Capital Budgeting
- Official topics
- Conventional and discounted cash flow methods; certainty equivalents; risk-adjusted discounting; decision trees; independent and dependent risk analysis; replacement and sensitivity analysis
- Where in the notes
- Sections 2–4, pages 34–41
- Status
- Mapped
- Official unit
- Unit IV: Dividend Policy
- Official topics
- Walter, Gordon, MM and Lintner models; working capital approaches and estimation; inventories, cash and receivables
- Where in the notes
- Sections 2–11, pages 44–53
- Status
- Mapped
Official source: MBA (Financial Management) Scheme and Syllabus, 2021-22 onwards. The supplied source identifies MFM 104 on PDF page 30 and the marks split on page 3.
The supplied mapping describes coverage of the official syllabus topics, with additional revision questions and illustrations at the end of each unit.
MFM 104 finance notes FAQs
How do I get the full MFM 104 notes?
Use the WhatsApp ordering button at the end of this page. The complete MFM 104 notes are sold as a printed book, not as a downloadable PDF. A sample PDF is planned for preview. Delivery takes up to 5 to 7 days depending on location.
Do the MFM 104 notes follow the current GGSIPU MBA (FM) scheme?
The notes follow the MBA (Financial Management) scheme labelled 2021-22 onwards. The supplied editorial record maps all four official units, including pension funds, Lintner's dividend model and the Miller-Orr cash model. Students should compare their batch's current syllabus before ordering.
How many marks is MFM 104 out of, and what is the passing mark?
MFM 104 carries 100 marks: 25 internal and 75 end-term. The internal component is described as a 15-mark class test plus 10 marks for other assessment activities. The supplied scheme does not specify a pass percentage. Refer to GGSIPU Ordinance 11 for applicable examination rules.
Which MFM 104 unit has the most solved numericals?
Unit 2, Capital Structure, has the most solved illustrations at 14. Unit 1 has 13, Unit 4 has 10 and Unit 3 has 8. Unit 3 also includes a single project evaluated using seven capital budgeting methods.
Do the MFM 104 notes show the MS-Excel functions the syllabus asks for?
Yes. The supplied notes plan includes an Excel table in every unit. Unit 1 includes FV, PV, PMT, IPMT, PPMT, NPER, RATE and EFFECT. Unit 3 includes NPV, XNPV, IRR, MIRR, NORM.DIST, Data Table and Goal Seek, with formulas accompanying several worked illustrations.
Is there a lab paper paired with MFM 104?
No. MFM 104 is a theory-only core paper carrying 3 lecture hours and no tutorial or practical hours. The supplied programme plan identifies MFM 117 Information Technology Management Lab in Semester 1 and MFM 227 Business Analytics Lab in Semester 3; neither is paired with MFM 104.
Get the full MFM 104 Financial Management Notes on WhatsApp
The complete English notes are sold as a printed book, not as a PDF. The supplied product description lists 55 pages, 45 solved illustrations and 58 exam-style questions. The identified unit and preliminary page ranges account for 54 pages; page 55 still requires confirmation.
| Part | Pages | Solved illustrations |
|---|---|---|
| Cover and index | 1–3 (3) | — |
| Unit 1: Financial Objectives | 4–19 (16) | 13 |
| Unit 2: Capital Structure | 20–32 (13) | 14 |
| Unit 3: Capital Budgeting | 33–42 (10) | 8 |
| Unit 4: Dividend Policy | 43–54 (12) | 10 |
| Additional page to confirm | 55 (1) | — |
| Listed book total | 55 | 45 |
MFM 104 printed notes book: identified page ranges and solved illustrations
- Part
- Cover and index
- Pages
- 1–3 (3)
- Solved illustrations
- —
- Pages
- 4–19 (16)
- Solved illustrations
- 13
- Pages
- 20–32 (13)
- Solved illustrations
- 14
- Pages
- 33–42 (10)
- Solved illustrations
- 8
- Pages
- 43–54 (12)
- Solved illustrations
- 10
- Part
- Additional page to confirm
- Pages
- 55 (1)
- Solved illustrations
- —
- Part
- Listed book total
- Pages
- 55
- Solved illustrations
- 45
Delivery: within 5 to 7 days at most; the exact time may vary with your location.
Order the MFM 104 notes book on WhatsApp (4 units, 55 pages)
Unnati Educations is an independent education provider based in Vikaspuri, Delhi. We are not affiliated with, authorised by, or endorsed by Guru Gobind Singh Indraprastha University (GGSIPU). 'GGSIPU' and 'IPU' are used only to describe the syllabus our notes follow. For official information, visit ipu.ac.in.
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