Chapter+01,+1+-+Corporate+Finance

Chapter+01,+1+-+Corporate+Finance - anything and everything...

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Corporate Finance Capital Budgeting: The process of planning and managing a firm’s long-term investments. Capital Structure: The mixture of debt and equity maintained by a firm. Working Capital Management: A firm’s short-term assets and liabilities. 1 Day 01: Chapter 01
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Applications to Households Investments Stocks Bonds Risk and Return Diversification Interest Rates Time Value of Money Loans Interest Rates Monthly Payments Amortization Time Value of Money 2 Day 01: Chapter 01
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Goal Of Financial Management What should be the goal of a corporation? Maximize profit? Minimize costs? Maximize market share? Maximize the current value per share of the company’s existing stock Maximize the market value of the existing owners’ equity Day 01: Chapter 01 3
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Goal Of Financial Management Does this mean we should do
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Unformatted text preview: anything and everything to maximize owner wealth? Outsourcing? Off-shoring? Enron? Corporate support of charities? Day 01: Chapter 01 4 Sarbanes-Oxley Act (SarBox, 2002) Driven by corporate scandals Enron, Tyco, WorldCom, Adelphia Intended to strengthen protection against accounting fraud and financial malpractice Compliance very costly Firms driven to: Go public outside the U.S. Go private (go dark) Day 01: Chapter 01 5 The Agency Problem Agency relationship Principal hires an agent to represent its interests Stockholders (principals) hire managers (agents) to run the company Agency problem Conflict of interest between principal and agent Management goals and agency costs Day 01: Chapter 01 6...
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Chapter+01,+1+-+Corporate+Finance - anything and everything...

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