AFM Regular Batch Lec 1 Demo 2026 | Basics of AFM | CA Final

Main ideas & lessons conveyed

1) Welcome + instructor background

• The lecturer introduces himself as Praveen Khatod, a Chartered Accountant (CA) who became CA in 2005.
• His career path:
  • Worked in Bengaluru (Infosys)
  • Worked in Mumbai (financial services)
  • Moved to America (2007–2010)
  • Returned to India in 2010
• In the US, he pursued finance/professional qualifications:
  • CFA (Chartered Financial Analyst)
  • CPA (Certified Public Accountant)
• Since 2010, he teaches Advanced Financial Management (CA Final) and also related subjects:
  • Intermediate Costing
  • Intermediate FM
  • CFA levels 1–3

2) How to decide the right starting point for CA Final FM/AFM

• He addresses common misconceptions about ordering:
  • Students often think FR first, then FM, or FM could follow FR.
  • He emphasizes that AFM should start from fundamentals.
• Default assumption:
  • Learners have passed CA Intermediate and mostly need a “brush-up” of basics.

3) AFM (Advanced Financial Management) purpose and scope

• He reframes AFM as a high-scoring, career-shaping subject.
• Unlike subjects he labels as comparatively “villains” (audit/DT/IDT), AFM can be mastered for strong scores.
• AFM includes topics such as:
  • Procurement and utilization of funds
  • Cost of Capital
  • Capital Structure
  • Leverage
  • Investment Decisions (Capital Budgeting)
  • Dividend Decisions
  • Working Capital Management

4) Wealth maximization as the core objective

• He contrasts:
  • Profit maximization vs Wealth maximization
• He argues wealth maximization is broader and connects it to real companies that grew valuation even before sustained profits, e.g.:
  • Zomato
  • Amazon (long loss period initially)
  • WhatsApp
  • Instagram/Facebook
• Wealth creation examples:
  • Investors paying more for growth/market position even when profits are absent.
  • Reliance Jio as a strategy case: eliminating competition early to scale rapidly.

5) Career and exam strategy: “score 100%”

• He strongly motivates students to target 80+, even 100, by focusing on:
  • Conceptual clarity (100%)
  • Full syllabus coverage (100%)
  • Hard work (100%)
  • Revisions 3–4 times
• He links top marks to placements and broader finance career outcomes.

6) Education philosophy: knowledge first, exam as by-product

• He emphasizes learning “for knowledge” rather than only “to pass”.
• Finance education should help you:
  • Manage wealth
  • Earn through investments and compounding
  • Apply concepts in real-world decisions

7) “Practical application” theme (real-life vs book formulas)

• He notes that formulas in books may not match real life exactly.
• With conceptual foundations, students can modify and apply formulas appropriately.
• Example direction:
  • Algorithmic/quantitative trading requires deeper statistical understanding.

8) AFM syllabus overview (chapters highlighted)

He outlines that AFM blends:

• Corporate finance
• Personal finance
• Decision-making “like on the job floor”

Key chapter concepts introduced:

Corporate Finance

• Case-based decision-making (e.g., where to set up a factory; start one business vs two)
• Capital budgeting / advanced capital budgeting, including:
  • Inflation effects
  • Risk vs returns (not only NPV)

International Financial Management

• Foreign exchange exposure and currency risk
• Managing risk from adverse currency movements

Interest rate risk management

• Fixed vs floating rate loans
• Example: interest rate shock (context referenced: Ukraine/Russia attack)
• Using financial instruments to reduce/eliminate risk

Mergers and Acquisitions (M&A)

• Organic vs in-organic growth
• Example: Adani acquiring companies using pledge mechanisms
• Role of valuation in acquisition decisions

Security & Business Valuation

• Business survival tied to corporate strategy
• Strategy and changing business environments
• New-age companies and startups in markets

Start of Personal Finance

• Investing early: portfolio construction, diversification
• Fundamental vs technical analysis
• Bond investing and interest-rate cycle strategy
• Risk management and “edge”

Derivatives / Futures and Options

• Derivatives for profit and for portfolio hedging
• Put option example: selling puts and profiting if price doesn’t fall

Mutual funds

• Selecting funds
• Tax-efficiency concept (capital gains differences vs direct stock investing)

Risk management + portfolio approach

• Focus on “edge” and risk controls

Time Value of Money (TVM)

• Present value, future value, annuities, perpetuities, growing perpetuities
• Methods to compute PV/NUT/NET and perpetuity formulas
• Common calculator-step pitfalls (especially exponent/power presses)

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Methodology / instruction list (exam + teaching + computations)

A) How students should study for AFM (as taught by the lecturer)

• Target: 100/100 (or at least 80+)
• Build conceptual clarity:
  • Understand definitions, objective logic, and how formulas arise
• Ensure full coverage:
  • Revise all chapters/topics, not only selected ones
• Hard work and revision:
  • Revise minimum 3–4 times
  • Include a last-day revision of pre-selected areas
• Avoid exam-day mistakes:
  • “Even small mistakes” can cost multiple marks—especially cashflow/NPV step errors

B) Teaching methodology (how class will be conducted)

• The lecturer’s stated structure:
  • Lay down a conceptual framework
  • Provide comprehensive examples per chapter
  • Categorize questions into groups and solve using those categories
  • Practice after explanations:
    • After comprehensive examples + RTP/mocked patterns, students solve question sets
• “Last day” responsibility:
  • Provide a Champion Book (revision-focused) and Practice Book
  • The claim: these books contain the needed question coverage, so students won’t need extra external material
• Emphasis areas:
  • Revision plans with chapter-wise time allocations
  • Reducing surprise by ensuring repeated and exam-pattern questions

C) Specific computational guidance (calculator / TVM)

• Present value (single cash flow):
  • Use PV factor or compute directly as required
• Future value (FV):
  • Be careful with exponent/calculator steps:
    • PV: press equals repeatedly for the power
    • FV: exponent step count differs because exponentiation is applied once
• Net cash flow series (NUT/NET) discounting:
  • Compute PV factors per year and sum weighted by the cashflows
• Perpetuity:
  • Present value formula stated as a / r
• Growing perpetuity:
  • Formula mentioned: a1 / (r − g) (deeper derivation promised later)

D) How to evaluate decisions in advanced capital budgeting

• Don’t use only “return logic” (NPV).
• Consider risk as the other side of the coin:
  • A lower NPV project may still be preferable depending on risk differences

E) How to interpret key ratios taught in the basics session

(He teaches EPS/dividend ratios/PE ratio and interprets them practically.)

EPS (Earnings per share)

• EPS = earnings available to equity shareholders ÷ number of shares

Dividend-related measures

• Dividend percentage uses face value
• Dividend yield uses market price
• Dividend payout ratio = dividend as a fraction of earnings

PE ratio (Price-Earnings)

• PE = Market price / EPS
• Interpretation:
  • How many times earnings the market price reflects
  • Connected to goodwill/brand reputation, risk perception, and growth expectations

Market capitalization

• Market cap = market price × number of shares
• Related conceptually through PE/EPS logic

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Speakers / sources featured

1. Praveen Khatod (lecturer; Chartered Accountant; teacher of AFM/related topics)
2. ICAI / ICAI syllabus and publications (referenced for syllabus structure, RTP, mock patterns, etc.; “ICI” likely meaning ICAI)
3. BSE India website (example source for Infosys face value, dividends, results)
4. Google Finance (example source for market ratios like PE)
5. RBI (referenced in interest rate discussions and rate changes)
6. Government of India bonds (referenced as an example of risk-free instrument)
7. Nifty index (referenced as an input for market return RM)
8. Examples of companies/brands (illustrative; not “sources”): Zomato, Swiggy, Amazon, WhatsApp, Instagram/Facebook, Reliance Jio, Infosys, Hindustan Unilever, Nestlé, DMart, Adani Enterprises, Reliance Industries, Vodafone Idea, etc.