FIN/571 Week 2 Discussion Questions.docx

The national association of securities dealers

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The National Association of Securities Dealers Automated Quotations ( NASDAQ) is a dealers market that was founded in 1971. The Nasdaq does not have a physical trading floor at all. Individuals do not buy and sell from one another directly. The buying and selling takes place electronically through a dealer. References: Ross, S., Westerfield, R., Jaffe, J., & Jordan, B. (2016). Corporate Finance (11th). New York, NY: McGraw-Hill. Total returns on stocks consist of dividends and capital gains. Do investors care about the composition of the total return (i.e. how much comes from dividends and how much comes from capital gains)? Should they? ERRs Week 2: FIN/571: Corporate Finance: R9 T3 Live, (2013). Company Value (02:42) [Video file]. Films on Demand. T3 Live, (2013). Earnings Per Share, Dividend, & Yield (03:23) [Video file]. Films on Demand. Week 1 Ch1 DQ Describe the goal of financial management. When it comes to financial management in an organization, I would describe the goal as a way to control the way funds are invested, spent, and organized to make sure the organization remains profitable. Our textbook describes the goal of financial management as “making decisions that increase the value of the stock, or, more generally, increase the value of the equity.” (2016, Ross, S., Westerfield, R., Jaffe, J., & Jordan, B.) In addition, our textbook demonstrates that profitability is not the only goal, rather there are a variety of goals when it comes to financial management. “Profit maximization would probably be the most commonly cited goal, but even this is not a precise objective.” (2016, Ross, S., Westerfield, R., Jaffe, J., & Jordan, B.) Basically, the goals of financial management depend on the needs of the organization. Here are a few financial management goals to consider: Survive. Avoid financial distress and bankruptcy. Beat the competition.
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Maximize sales or market share. Minimize costs. Maximize profits. Maintain steady earnings growth. References: Ross, S., Westerfield, R., Jaffe, J., & Jordan, B. (2016). Corporate Finance (11th). New York, NY: McGraw-Hill. DQ Identify the three main areas of concern in corporate finance. Our textbook states “The most important job of a financial manager is to create value from the firm’s capital budgeting, financing, and net working capital activities.” (2016, Ross, S., Westerfield, R., Jaffe, J., & Jordan, B.) The three main areas of concern in corporate finance are capital budgeting, capital structure, and working capital management. Capital budgeting helps plan and coordinate which long-term investments an organization should consider. Capital structure identifies where the organization will receive the long-term financing needed to pay for its investments. Capital structure also determines which mixture of debt and equity should be used to fund operations of the organization. Working capital management helps the organization determine how daily financial activities should be managed.
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