Corporate Finance
Subject: Corporate Finance (3 credits)
Reference book: 1. Essentials of managerial Finance: Harcourt College 2000 2. Fundamentals of financial management: Mc Graw Hill 2007
Chapter 01: An overview of Finance
What is finance?
Finance is concerned with decisions about money (cash flows)
Finance decisions deal with how money is raised and used
Everything else being equal: * More vale is preferred to less * The sooner cash is received the more value it has * Less risky assets are more valuable than riskier assets *
General Areas of Finance: * Financial Market and Institutions * Investments * Financial Services * Managerial Finance
Financial staff responsibility: * Forecasting and planning * Major investment and financing decisions * Coordination and control. * Dealing with the financial markets * Risk management.
In summary, people working in financial management make decisions regarding which assets their firms should acquire, how those assets should be financed, and how the firm should conduct its operations. If these responsibilities are per- formed optimally, financial managers will help to maximize the values of their firms, and this will also contribute to the welfare of consumers and employees.
Alternative Forms of business Organization: 1. Proprietorship (household/ individuals): is an unincorporated business owned by one individual
Advantages (3): * It is easily and inexpensively formed. * Subject to few government regulations * It is taxed like an individual, not a corporation (or no corporate income taxes)
Limitations (4): * Unlimited personal liability for business debts * Limited life (life of business organized as a proprietorship is limited to the life of individual who created it.) * Transfering ownership is somewhat difficult * Difficult to raise and obtain large sums of capital, because the firm’s financial strength is based on the
Reference book: 1. Essentials of managerial Finance: Harcourt College 2000 2. Fundamentals of financial management: Mc Graw Hill 2007
Chapter 01: An overview of Finance
What is finance?
Finance is concerned with decisions about money (cash flows)
Finance decisions deal with how money is raised and used
Everything else being equal: * More vale is preferred to less * The sooner cash is received the more value it has * Less risky assets are more valuable than riskier assets *
General Areas of Finance: * Financial Market and Institutions * Investments * Financial Services * Managerial Finance
Financial staff responsibility: * Forecasting and planning * Major investment and financing decisions * Coordination and control. * Dealing with the financial markets * Risk management.
In summary, people working in financial management make decisions regarding which assets their firms should acquire, how those assets should be financed, and how the firm should conduct its operations. If these responsibilities are per- formed optimally, financial managers will help to maximize the values of their firms, and this will also contribute to the welfare of consumers and employees.
Alternative Forms of business Organization: 1. Proprietorship (household/ individuals): is an unincorporated business owned by one individual
Advantages (3): * It is easily and inexpensively formed. * Subject to few government regulations * It is taxed like an individual, not a corporation (or no corporate income taxes)
Limitations (4): * Unlimited personal liability for business debts * Limited life (life of business organized as a proprietorship is limited to the life of individual who created it.) * Transfering ownership is somewhat difficult * Difficult to raise and obtain large sums of capital, because the firm’s financial strength is based on the