Chapter1FINANCE300 - FINANCE 300 SPRING 2010 Dr. Denis...

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FINANCE 300 SPRING 2010 CHAPTER 1 Dr. Denis Boudreaux TOPICS: I . GOAL OF THE FIRM IS TO MAXIMIZE THE STOCK PRICE: This means to maximize _______________________________ or maximize ________________________________ Most firms have this goal defined in writing in their mission statement as their most important objective or primary goal. Watch CNBC’s Squawk box. II. 5 Minute Lesson to success : 1. All successful companies identify, create and deliver products or services that are highly valued by their customers. These products or services are so highly valued by the companies or customers that they choose to purchase them from the successful company rather than from its competitors. This happens only if the company has a competitive advantage , that is, it provides more value than its competitors, either in the form of: 1). lower prices with acceptable quality, 2). Convenience or location, 3). delivery speed or method, or 4). superior products. LESSON I. Produce at a low cost or provide a better product/service or have a most attractive location/delivery means 2. All successful companies sell their products/services at prices that are high enough to cover all costs and to compensate owners and creditors for their exposure to risk. In other words, it’s not enough just to win market share and to show a profit. The profit must be high enough to adequately compensate investors and creditors. LESSON II. Cover all costs including operating and debt and equity financing III. Key Attributes to Success : 1. Successful companies have skilled people : -Executives-long term vision, smart, experience, know business, etc
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This note was uploaded on 05/19/2010 for the course FNAN 300 taught by Professor Boudreaux during the Spring '10 term at University of Louisiana at Lafayette.

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Chapter1FINANCE300 - FINANCE 300 SPRING 2010 Dr. Denis...

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