Lecture 1 - Lecture 1 Introduction to Corporate...

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Lecture 1 Introduction to Corporate Finance (Ch.1) McGraw-Hill/Irwin
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Outline Corporate Finance and the Financial Manager The Goal of Financial Management Forms of Business Organization The Agency Problem and Control of the Corporation Financial Markets in the U.S. 1-1
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Corporate Finance Important questions: What long-term investments should the firm take on? Where will we get the long-term financing to pay for the investment? How will we manage the everyday financial activities of the firm? 1-2
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Financial Manager Financial managers try to answer some or all of these questions The top financial manager within a firm is usually the Chief Financial Officer (CFO) Corporate (business) finance covers: accounting, financial services, investment management, insurance, venture capital, corporate development, strategic planning 1-3
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Financial Management Decisions 1. Capital budgeting The process of planning and managing a firm’s long-term investments The key concerns: size, timing, and riskiness of future cash flows Examples: Product/service to sell, replacement of old equipment, Wal-Mart store 1-4
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Decisions 2. Capital structure Specific mixture of debt and equity the firm uses to finance its operations How much should we borrow? What is the optimal capital structure? What are the least expensive sources of funds? When and where should the firm raise
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Lecture 1 - Lecture 1 Introduction to Corporate...

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