finance_mngmt_chap1

finance_mngmt_chap1 - Chapter 1: Introduction to Corporate...

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Chapter 1: Introduction to Corporate Finance 1.1 Corporate Finance and the Financial Manager Corporate finance answers three questions: 1. Capital Budgeting: What long-term investments should you take on? That is, what lines of business will you be in and what sorts of buildings, machinery, and equipment will you need? 2. Capital Structure: Where will you get the long-term financing to pay for your investment? Will you bring in other owners or will you borrow the money? 3. Working Capital: How will you manage your everyday financial activities such as collecting from customers and paying suppliers? The Financial Manager - In a large corporation, the financial manager would be in charge of answering the three questions. The top financial manager within a firm is usually the Chief Financial Officer (CFO) who coordinates the activities of the: Treasurer – oversees cash management, credit management, capital expenditures and financial planning Controller – oversees taxes, cost accounting, financial accounting and data processing The Financial Manager answers the three questions by overseeing: Capital Budgeting – process of planning and managing a firm’s long-term investments;
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finance_mngmt_chap1 - Chapter 1: Introduction to Corporate...

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