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Finance and The Financial Manager Ch#1

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Finance and The Financial Manager Ch#1

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									                                                    Principles of
                                                  Corporate Finance
              Chapter 1                                  Eighth Edition




    Finance and The
   Financial Manager
                                                               Slides by
                                                           Matthew Will


McGraw-Hill/Irwin         Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
                                                                                               1- 2


                    Topics Covered

      What Is A Corporation?
      The Role of The Financial Manager
      Who Is The Financial Manager?
      Separation of Ownership and Management




McGraw-Hill/Irwin    Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
                                                                                                  1- 3

                    Corporate Structure

   Sole Proprietorships
                                                     Unlimited Liability
                                                  Personal tax on profits
         Partnerships



                                            Limited Liability

         Corporations                       Corporate tax on profits +
                                            Personal tax on dividends


McGraw-Hill/Irwin       Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
                                                                                                     1- 4

    Role of The Financial Manager

                    (2)                                                       (1)


   Firm's                              Financial                                          Financial
                                                                  (4a)
 operations                            manager                                            markets

                    (3)                                                 (4b)

                          (1) Cash raised from investors
                          (2) Cash invested in firm
                          (3) Cash generated by operations
                          (4a) Cash reinvested
                          (4b) Cash returned to investors

McGraw-Hill/Irwin          Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
                                                                                                   1- 5

    Role of The Financial Manager

    Common Finance Terminology
         – Real assets
         – Financial assets / Securities
         – Capital markets and financial
           markets
         – Investment / capital budgeting
         – Financing




McGraw-Hill/Irwin        Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
                                                                                                    1- 6

   Who is The Financial Manager?

                        Chief Financial Officer




            Treasurer                                          Controller




McGraw-Hill/Irwin         Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
                                                                                              1- 7

        Ownership vs. Management
 Difference in Information                        Different Objectives

 Stock prices and returns                    Managers vs.
 Issues of shares and                         stockholders
  other securities                            Top mgmt vs.
 Dividends                                    operating mgmt
 Financing                                   Stockholders vs. banks
                                               and lenders




McGraw-Hill/Irwin   Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
                                                                                                   1- 8

                    Web Resources
                                                           Click to access web sites
                                                           Internet connection required

                    www.careers-in-finance.com/
                    www.careers.wsj.com
                    www.wageweb.com
                    www.corpgov.net
                    www.thecorporatelibrary.com




McGraw-Hill/Irwin        Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

								
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