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311 ch1 - Financial Management Roles and Objectives Chapter...

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Financial Management: Roles and Objectives Chapter 1
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Financial Disciplines Investments Markets and Institutions Corporate Finance Business Finance or Managerial Finance This course is primarily concerned with managerial finance. However, we will assume the role of a banker or an investor from time to time.
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Roles of the Financial Manager What investments should a business make? Capital Budgeting How should a firm pay for its investments? Capital Structure How to raise funds Debt vs. Equity Short term vs. Long term Dividend Policy Initial Public Offerings Lease or Buy?
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Does the firm have enough cash to meet daily operating needs? Working Capital Management Cash and Inventory Management Credit/Accounts Receivable Management Trade Credit/Short Term Capital Other Planning and Forecasting Mergers/Acquisitions Divestitures (Asset Sales or Spinoffs) Bankruptcy Valuations
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Objective of the Manager Financial Managers make a lot of decisions. How does the manager decide what is the right decision? Potential criteria include: Maximize Sales Minimize Costs Maximize Profits Others
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None of these criteria consider cash effects rather than accounting results None of these criteria consider long term effects (timing) Reduce maintenance to improve results this period. What happens next period?
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