Chapter 1 - Chapter 1 Introduction to Corporate Finance...

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Chapter 1 Introduction to Corporate Finance
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Some Basic Questions 1. What should a firm invest in? 2. How should a firm finance its investments? 3. How do investment and financing needs change over time?
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The Assets of a Firm Fixed Assets -Tangible (examples: factories, equipment) -Intangible (examples: patents, technological advantages, talented employees) Current Assets -Inventory -Accounts receivable -Cash -Financial assets
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The Liabilities of a Firm Stock (equity financing) Bonds Bank Loans Accounts payable, trade credit, current liabilities
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Forms of Business Organization Sole proprietorship Partnership Corporation --Liquidity and Marketability of Ownership --Limited Liability --Continuity of Existence --Tax Considerations
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The Goals of the Financial Manager Maximize value when making investment decisions What does this mean? Simple answer: revenues - costs Complications: (1) deferred cash is worth less than cash today (2) risk considerations Maximize value when making financing decisions
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Chapter 1 - Chapter 1 Introduction to Corporate Finance...

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