Learning objectives
By the end you can:
- Manage, not merely measure, the Cash Conversion Cycle, name the specific operational lever behind each of DIO, DSO and DPO, classify a liquidity policy as matching, conservative or aggressive, and distinguish a drag on liquidity from a pull: building directly on M2.02's ratio computation without re-deriving it.
- Compute the annualized cost of trade credit foregone under stated terms (e.g., "2/10, net 45"), and select among a short-term funding menu (bank line/cash-credit, commercial paper priced on a discount basis, and receivables factoring/supply-chain finance) on one consistent, all-in effective-annual-cost basis.
- Reconstruct the mechanical anatomy of a dividend (declaration, ex-dividend, record and payment dates) including the T+1 settlement change that collapsed the ex-dividend date onto the record date in both India and the United States, and compute the frictionless theoretical ex-dividend price drop.
- Compute the share-count and price arithmetic of a cash dividend, a dividend reinvestment (DRIP, including fractional-share handling), a bonus issue/stock dividend, and a stock split, and state precisely how a bonus issue differs from a split in what it does to reserves and par/face value.
- Apply Lintner's partial-adjustment model to show why observed dividends are smoothed relative to swings in earnings, and connect dividend policy to signaling theory, the agency/free-cash-flow hypothesis, clientele effects and the tax-preference argument, including current India (post-October-2024 buyback-tax) and US (qualified-dividend holding-period) mechanics, each cited to its primary source.
- Explain why depositary receipts exist, compute a cross-listing parity check from a real, verified depositary ratio, and state the mechanical difference between a sponsored and an unsponsored programme and between Levels I, II and III (ADRs) versus a GDR's typical listing venues.
- Compute the gap between voting power and economic ownership created by a differential-voting-rights structure (India's historical DVRs and its newer superior-voting-rights framework for founders) and by a US dual-class structure, using a real, verified share-class ratio.
- Build a small index from scratch: free-float-adjust a market-cap universe and compute constituent weights under cap-weighted, equal-weighted, price-weighted and a simple factor-tilt scheme on the identical universe, and quantify the turnover a rebalancing forces under each scheme.
- Read a real index provider's published eligibility and reconstitution rules: NSE Indices' Nifty 50 methodology and S&P Dow Jones Indices' S&P U.S. Indices methodology, and screen a candidate company against them, cross-referencing (never re-deriving) AA1.03's seven benchmark-validity properties and its PRI-versus-TRI treatment.
- Name, for each of the four completions above, the single fact most likely to be stale or fabricated in an AI assistant's answer, and the primary source that settles it.
- (Productivity objective: R10.) Reproduce this module's cash-flow, weighting, and voting-power arithmetic in Python/pandas, and use an AI assistant to accelerate drafting and first-pass screening, while retaining the by-hand skill the mastery gate rewards and running every date, ratio, and rule through the Primary-Source Guardrail (Trace, Match, Recompute, Date-check, Cite) before it is used for anything.
The duality, stated once (R10). The gated skill is the arithmetic and the vocabulary, done and stated correctly by hand: an effective-annual trade-credit cost, a free-float weight, a voting-power gap. The productivity payoff is doing the same work over a thousand-line holdings file in fifteen lines of pandas. But this module's four completions are, individually and collectively, dominated by facts that are precise, dated, and perishable, and a fluent AI answer about any one of them is exactly as confident whether it is current or stale. Nothing here is drilled to nagging-caution levels for its own sake; it is drilled because this specific region of the corpus rewards a verify-first reflex more than almost any other.