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ch1 - PA R T 1 INTRODUCTION TO MANAGERIAL FINANCE CHAPTERS...

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1 P A R T 1 I NTRODUCTION TO M ANAGERIAL F INANCE CHAPTERS IN THIS PART 1 The Role and Environment of Managerial Finance 2 Financial Statements and Analysis 3 Cash Flow and Financial Planning Integrative Case I: Track Software, Inc.
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L E A R N I N G G O A L S 2 T HE R OLE AND E NVIRONMENT OF M ANAGERIAL F INANCE C H A P T E R Across the Disciplines WHY THIS CHAPTER MATTERS TO YOU Accounting: You need to understand the relationships between the firm’s accounting and finance functions; how the financial statements you prepare will be used for making investment and financing decisions; ethical behavior by those responsible for a firm’s funds; what agency costs are and why the firm must bear them; and how to calculate the tax effects of proposed transactions. Information systems: You need to understand the organization of the firm; why finance personnel require both historical and projected data to support investment and financing decisions; and what data are necessary for determining the firm’s tax liability. Management: You need to understand the legal forms of busi- ness organization; the tasks that will be performed by finance personnel; the goal of the firm; the issue of management com- pensation; the role of ethics in the firm; the agency problem; and the firm’s relationship to various financial institutions and markets. Marketing: You need to understand how the activities you pur- sue will be affected by the finance function, such as the firm’s cash and credit management policies; the role of ethics in pro- moting a sound corporate image; and the role the financial mar- kets play in the firm’s ability to raise capital for new projects. Operations: You need to understand the organization of the firm and of the finance function in particular; why maximizing profit is not the main goal of the firm; the role of financial insti- tutions and markets in providing funds for the firm’s production capacity; and the agency problem and the role of ethics. Explain why wealth maximization, rather than profit maximization, is the firm’s goal and how the agency issue is related to it. Understand the relationship between financial institutions and markets, and the role and opera- tions of the money and capital markets. Discuss the fundamentals of business taxation of ordinary income and capital gains, and explain the treatment of tax losses. LG6 LG5 LG4 Define finance, the major areas of finance and the career opportunities available in this field, and the legal forms of business organization. Describe the managerial finance function and its relationship to economics and accounting. Identify the primary activities of the financial manager within the firm. LG3 LG2 LG1 1
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3 S ometimes it seems that there’s a Starbucks on every corner—and now in supermar- kets and hospitals, too. The company that rev- olutionized the way we think about coffee now has over 4,800 retail locations worldwide and 15 million customers lining up for lattes and other concoctions each week.
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