01.FIN3701_ch01 - Chapter1...

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    Chapter 1 Introduction to Financial Management
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    What is Finance? Creating wealth and maintaining it Corporate finance is an area of finance  dealing with the financial decisions  corporations make and the tools and  analysis used to make these decisions.
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    Goal of the Firm Maximize shareholders wealth OR Maximize profits
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    Goal of the Firm Profit Maximization? this goal have problems with: Timing of returns Profit NOW or LATER?? Uncertainty of returns 2M profit 1 st  yr = 2M profit 2 nd  yr
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    Example You have 1 millions baht and two choices  of investment 1. Deposit at bank and expect to get profit  50,000 baht 1. Invest in Stock market and expect to get  profit of 50,000 baht
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    Example suppose the current saving rate is 10% per  year. You have 1 million to invest in  running new business. 1. Your business generates loss 2. Your business generates net profit (net  income) of 80,000 baht
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    Goal of the Firm Shareholder Wealth Maximization this is the same as: Maximizing Firm Value Maximizing Stock Price
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    Owner owns stock
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01.FIN3701_ch01 - Chapter1...

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