Lecture 1

Lecture 1 - The key responsibilities of the CFO The two...

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The key responsibilities of the CFO The two main parts of CF are allocation (investment) and financing , corresponding to the A&L sides of the balance sheet. The ultimate objective is to maximize the shareholders’ wealth: achieve the highest return on the projects and ensure the cheapest financing. Evaluation of the investment projects is based on the discounted cash flows , which are different from the accounting profits (e.g. because of depreciation). The real options approach takes into account that managers can influence the CFs after the beginning of the project. Applying similar methods, one can value the company. The company can be restructured from private to a public one via IPO , and vice versa. Another type of structural change comes from s. The company’s goal is to acquire the companies bringing synergy gains and those undervalued due to the inefficient management. The best defence from the acquisition is to maximize its own value. The goal of
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This note was uploaded on 04/04/2012 for the course FIN 400 taught by Professor Kedia during the Spring '12 term at Rutgers.

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Lecture 1 - The key responsibilities of the CFO The two...

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