Introduction to Corporate Finance

Session One

Corporate Finance

• Text book: Fundamentals of Corporate Finance by Brealey, Myers, Marcus

• Reference book: Corporate Financial Management by Douglas R. Emery & John D. Finnerty

Corporate Finance

Activity Marks Duration Frequency Selection Weight age

Quiz 10 Max. 15 minutes Three Best 2 10%

Assignment 10 Two weeks Two Best 1 10%

Hourly Exam 20 75 Minutes Two Best 1 20%

Report/Presentation 10 N/A One One 10%

Final 50 3 hours One One 50%

Course Outline

Introduction

Value&

Investment

Risk

Financing

Debt & Pay out Policy

Special Topics

What is Corporate Finance ? Corporate Finance is to oversee the financial activities of a company. It is primarily concerned with maximizing shareholder value through long-term and short-term financial planning and the implementation of various strategies.

Everything from capital investment decisions to investment banking falls under the domain of corporate finance.

The Role of The Financial Manager

• Capital Budgeting Decision– Decision to invest in various assets.

• …also called the Investment Decision

The Role of The Financial Manager

• Financing Decision– The form and amount of financing of a firm’s

investments.

• Capital Structure– The mix of long term debt and equity financing.

Financial

Manager

Firm's

operations Investors

(1) Cash raised from investors

(1)

(2) Cash invested in firm

(2)

(3) Cash generated by operations

(3)

(4a) Cash reinvested

(4a)

(4b) Cash returned to investors

(4b)

The Role of The Financial Manager

Real assets (stockholders/ debtholders save and invest in a firm.

Who is The Financial Manager?

Chief Financial Officer

Treasurer Controller

Who is The Financial Manager?

• Chief Financial Officer (CFO)– Oversees the treasurer and controller and sets

overall financial strategy.• Treasurer– Responsible for financing, cash management, and

relationships with banks and other financial institutions.

• Controller– Responsible for budgeting, accounting, and taxes.

Thank you