FI.Chapter1 - S" -' r-4 /,Ja {t- '4r Chapter 1...

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Unformatted text preview: S" -' r-4 /,Ja {t- '4r Chapter 1 Chapter 2 Chapter 3 Chapter 4 An Overview of Financial Management and the Financial Environment 2 Time Value of Money 37 Financial Statements, Cash Flow, and Taxes Analysis of Financial Statements 123 85 , ij ds)- *" ri s 'Jt* j--/d; 7la Aer GvervEew c FEsqaec*Ea5 &aet*g*aeent and Et* FEcEameEaE EmvErorcrn*c'et n a global Lrcalrty corltesi fof companies, Lhc winner is . . . General lilectric. Or nt lcasi General Elcctric is the most admircd compan)' in the rcrld, accordinS to Forltl,,. magnzine's anilraL survev The other top ten global linalists are Fedlx, Southwcst A1r- lincs,l)rocter & Clamble, Starbucks,Jol son& lohnson, Berkshirc Hatha$'ay, Dell Conpu- ters, Tovota Motot and Microsoft. What do thcse companics havc that separatcs therr from the rest of the pack? AccordinS io more than 10,000 executivcs, dircck)rs, and seclrrit), analysts, these coupa- nies have the highest average ninc ittributes: (l) innovativeness, (2) quality of management, (3) k rg+erD investment vahrc, (4) social rcsponsibilit),, (5) employc'c' talent, (6) quality of producis and se icc5, (7) financial soundncss, (8) usc of corporatc asscts, and (!l) effectjvencss in donrg business ghball,v Many of thcsc companies compete ur curlmodity indlrstries in which it is very diffic lt to differcntinte their proclucts from those of thcir conrpetitom. Ilow do ihe), survive and thrive in such an c vironment? First, they have nn incrediblc focus on using irechnology to unclcrstand thcir customers, reducc costs, reducc inventory, and spec.l up product delivery. Second, ihcy contnru ally inno!,atc ancl Lnvesi in r{ai,s to ditferen- lijtc llrF r pn\luLt- F.'r (\.,rrple. (lf i. investing in nerv tcchnologies, such as nnnometals, hydrogen power, a d photo- voltaics. CEOl(rff Immrlt says that thrs are areas in which "vcrv fe$'can follo\!." Many companies hav a difficult timc attractirg cmployees. Not so for the most adnired companies, which have nlany Drore applicants than job openhgs. In additbn to their acnlnen (,ith tcchnology and costomcrs, they arc also on the lcading edgc when it comes to trrining employees and provicting a workplace in which pc'ople can thrjvc. ln a nutshell, these companies rcduce cosis by having innovative production processs, they creatc vrlue for customers by providing high-qualit)r producis and scr\,ices, a d the,v creatc value for omploy ees through training and fostering an .'nvr ronrnent that allows e1)1plo!,ces to Lrtilizc all of iheir skills and ialcnts. Do invcstors bencfit from this focus on processes, custonrcrs, and emplo)'ees? During ihc most recent s-),car period, these ten conpanies posted an average annual stock rctnm ol 7.67., wltich js quiie inrprcs sii'e hon compared with the 1.1'.? average annual de.linc in the S&l'500. Thesc supe rior rctlLflis arc due k) supcrior crsh fLow geDeratio\. Bui, as yor.r \,!iU see throughout ihis book, a comprny cnn generate cnsh floi{ onlv if it also creates vahre for iis custonrers, cmplo),ees, and supplicrs. This chapter should give you an idea of what linancial rranatement is all abort,...
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This note was uploaded on 06/08/2009 for the course FI 601-602 FI601-602 taught by Professor Prof.geary during the Spring '09 term at New Haven.

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FI.Chapter1 - S" -' r-4 /,Ja {t- '4r Chapter 1...

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