Académique Documents
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Professor XXXXX
Course Name / Number
Theactivities involved in
managing cash flows in a
business environment
1-3
The Core Principles of Finance
1-4
The Core Principles of Finance
Capital Budgeting
Financial Management
Corporate Governance
Risk Management
1-6
The Financing Function
Businesses can raise money in 2
ways:
externally from investors or creditors
IPOs
Primarymarket transactions
Secondary market transactions
1-7
Raising Capital: Key Facts
1-9
Growth in Global Security Issues
1 - 10
The Capital Budgeting Function
Capital Budgeting
selecting the best
projects in which to
invest the firms
resources
1 - 11
The Capital Budgeting Function
Thecapital budgeting process
consists of three steps.
Step 1 - identifying potential
investments
Step 2 - analyzing those investments to
identify which will create
shareholder value
Step 3 - implementing and monitoring
the investments selected in
step 2
1 - 12
The Financial Management Function
1 - 14
Value of Global Mergers &
Acquisitions
1 - 15
The Risk Management Function
Identifying, measuring, and managing all
types of risk exposures
Some risks are insurable, and some risks
can be reduced through diversification.
Financial instruments like forwards,
futures, options, and swaps may also be
used to hedge market risks such as
interest-rate, price, and currency
fluctuations.
1 - 16
Business Organizational Forms
in the United States
No Distinction Between Business &
Sole Owner
Proprietorshi Easy To Set Up, Operate; Business
Earnings Taxed As Personal Income
ps Limited Life, Limited Access to Capital,
Unlimited Personal Liability
1 - 18
Taxation of Business Income
AFTER the Jobs and Growth Tax Relief Reconciliation Act of
2003
1 - 19
Business Organizational Forms
in the United States
1 - 20
Forms of Business Organizations
Used by Non-U.S. Companies
1 - 21
Worldwide Privatization
Revenues
1 - 22
What Should a Financial Manager
Try to Maximize?
Maximize Profit?
Earnings per share are backward-looking,
dependent on accounting principles,
Do not fully consider cash flow timing
Ignores risk
1 - 23
World Stock Market
Capitalization
40000
35000
30000
US$ in Billions .
25000
20000
15000
10000
5000
0
1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005
United States United Kingdom Japan Other Developed Emerging Markets
1 - 24
Agency Costs
Managers act as agents of the owners
who hired them and gave them
decision-making authority to manage
the firm for the owners benefit.
In
practice however, self-interests
may cause managers to pursue
objectives other than shareholder-
wealth maximization.
This
conflict of goals gives rise to
managerial agency problems.
1 - 25
How Agency Costs Can Be
Controlled
1 - 26
Importance of Ethics
1 - 27