introduction to corporate finance
DESCRIPTION
Corporate finance is the study of a business's money-related decisions, which are essentially all of a business's decisions. Despite its name, corporate finance applies to all businesses, not just corporations. The primary goal of corporate finance is to figure out how to maximize a company's value by making good decisions about investment, financing and dividends. In other words, how should businesses allocate scarce resources to minimize expenses and maximize revenues? How should companies acquire these resources - through stock or bonds, owner capital or bank loans? Finally, what should a company do with its profits? How much should it reinvest into the company, and how much should it pay out to the business's owners? This walkthrough will explore each of these business decisions in greater depth.TRANSCRIPT
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