CS (Company Secretary) Financial and Strategic Management Syllabus

Financial and Strategic Management syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Financial and Strategic Management in CS (Company Secretary), not a summary of it.

1. 1

   Corporate Accounting and Financial Reporting

   4 topics

   • Accounting Fundamentals
     • Accounting concepts, conventions and standards
     • Preparation of financial statements
   • Company Accounts
     • Accounting for share capital and debentures
     • Consolidated financial statements
   • Indian Accounting Standards
     • Ind AS framework and convergence
     • Key Ind AS overview
   • Financial Statement Analysis
     • Ratio analysis
     • Cash flow and fund flow statements
2. 2

   Financial Management

   4 topics

   • Capital Budgeting
     • Time value of money
     • NPV, IRR and payback methods
   • Cost of Capital and Structure
     • Cost of debt, equity and WACC
     • Capital structure theories and leverage
   • Working Capital Management
     • Working capital cycle
     • Inventory, receivables and cash management
   • Sources of Finance
     • Equity, debt and hybrid instruments
     • Venture capital and project finance
3. 3

   Strategic and Cost Management

   3 topics

   • Strategic Management
     • Strategy formulation and analysis
     • SWOT, BCG and Porter's models
   • Cost and Management Accounting
     • Cost classification and costing methods
     • Marginal costing and break-even analysis
     • Budgeting and standard costing
   • Business Valuation
     • Valuation approaches and methods
     • Valuation of shares and goodwill

Financial and Strategic Management flashcards for CS (Company Secretary)

23 of 62 cards from the Financial and Strategic Management deck — real questions with worked answers.

1. What is the accounting equation?

   Assets = Liabilities + Owners' Equity (Capital). It reflects that all assets are financed either by creditors or owners.

2. State the dual aspect concept in accounting.

   Every transaction has two equal and opposite effects (a debit and a credit), keeping the accounting equation in balance. It is the basis of double-entry bookkeeping.

3. Differentiate between capital expenditure and revenue expenditure.

   Capital expenditure provides benefit over multiple years and is shown in the balance sheet (e.g., buying machinery); revenue expenditure benefits only the current period and is charged to the P&L (e.g., repairs, salaries).

4. What is the matching concept (matching principle)?

   Expenses incurred to earn revenue must be recognized in the same accounting period as that revenue, so profit for the period is measured correctly.

5. Define accrual basis of accounting.

   Revenues and expenses are recorded when they are earned or incurred, regardless of when cash is actually received or paid.

6. What are the three main financial statements prepared by a company?

   The Balance Sheet (Statement of Financial Position), the Statement of Profit and Loss (Income Statement), and the Cash Flow Statement.

7. Under the Companies Act 2013, what is the maximum rate of discount at which shares can be issued (general rule)?

   Issue of shares at a discount is generally prohibited under Section 53; the exception is sweat equity shares issued under Section 54.

8. What is the difference between authorized capital and paid-up capital?

   Authorized (nominal) capital is the maximum capital a company is permitted to raise per its Memorandum; paid-up capital is the portion of issued capital actually paid by shareholders.

9. How is securities premium (Securities Premium Account) permitted to be used under the Companies Act 2013?

   It can be used for issuing fully paid bonus shares, writing off preliminary expenses, writing off share/debenture issue expenses or commission/discount, providing premium on redemption of preference shares/debentures, and buy-back of securities.

10. What is the difference between a bonus issue and a rights issue of shares?

    A bonus issue gives free additional shares to existing shareholders out of reserves (no cash inflow); a rights issue offers new shares to existing shareholders at a set price in proportion to holdings (brings in cash).

11. What is the accounting treatment for forfeiture of shares?

    The Share Capital account is debited with the called-up amount, the amount already received is transferred to Forfeited Shares (Shares Forfeiture) account, and the unpaid calls are cancelled. On reissue, any balance left in the forfeited account is transferred to Capital Reserve.

12. Which body issues Indian Accounting Standards (Ind AS) and which body notifies them?

    Ind AS are formulated by the ICAI (Accounting Standards Board) and notified by the Ministry of Corporate Affairs (MCA) under the Companies (Indian Accounting Standards) Rules, 2015.

13. Ind AS are converged with which set of global standards?

    Ind AS are converged with IFRS (International Financial Reporting Standards) issued by the IASB.

14. Which Ind AS deals with Presentation of Financial Statements and which deals with Revenue from Contracts with Customers?

    Ind AS 1 deals with Presentation of Financial Statements; Ind AS 115 deals with Revenue from Contracts with Customers.

15. What is the five-step revenue recognition model under Ind AS 115?

    (1) Identify the contract, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the price to the obligations, (5) recognize revenue when (or as) each obligation is satisfied.

16. Which Ind AS governs accounting for inventories and what is its valuation rule?

    Ind AS 2 governs inventories; they are valued at the lower of cost and net realizable value (NRV).

17. What are the two broad categories of financial statement analysis based on user position?

    Internal analysis (by management with access to detailed data) and external analysis (by outsiders such as investors and creditors using published statements).

18. Distinguish between horizontal (comparative) and vertical (common-size) financial statement analysis.

    Horizontal analysis compares figures across multiple periods to show trends; vertical (common-size) analysis expresses each item as a percentage of a base figure (e.g., sales or total assets) within a single period.

19. What is the formula for the current ratio and what does the ideal value indicate?

    Current Ratio = Current Assets / Current Liabilities. An ideal benchmark is 2:1, indicating adequate short-term liquidity.

20. What is the quick ratio (acid-test ratio) formula?

    Quick Ratio = (Current Assets - Inventory - Prepaid Expenses) / Current Liabilities. The ideal benchmark is 1:1.

21. Define the debt-equity ratio and give its formula.

    It measures financial leverage. Debt-Equity Ratio = Long-term Debt / Shareholders' Funds (Equity). A common benchmark is 2:1.

22. What is the formula for Return on Equity (ROE)?

    ROE = (Net Profit after Tax - Preference Dividend) / Average Shareholders' Equity x 100.

23. State the DuPont identity for Return on Equity.

    ROE = Net Profit Margin x Asset Turnover x Equity Multiplier = (Net Profit/Sales) x (Sales/Total Assets) x (Total Assets/Equity).

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