CHAPTER1
OverviewofFinancial
Managementandthe
FinancialEnvironment
1
TopicsinChapter
n
n
n
n
Formsofbusinessorganization
Objectiveofthefirm:Maximizewealth
Determinantsoffundamentalvalue
Financialsecurities,marketsand
institutions
2
Whyiscorporatefinance
i
The Analysis of Financial Statements
Financial ratios are often thought of as being useful to:
1. Managers to help run their business
2. Bankers or other lenders for credit analysis
3. Stockholders (or potential investors) for investment decision-making.
Select a portfolio of common stocks in five companies whose stock is traded on
the New York Stock Exchange (NYSE). Base your selection of stocks on your own
personal willingness to take risks. Look up the beta of each company. Using equal
weights, compute
What is the DuPont equation, and how does it capture the nature of expense control,
efficiency of asset management, and financial leverage (or debt) of a firm? If you were the CFO of
your firm (or a hypothetical firm), what variable would you concentrate
Module 9
Tedventurous
(151)Define each of the following terms:
a. Capital structure: The manner in which a firm s assets are financed; that is, the right side of the
balance sheet. Capital structure is normally expressed as the percentage of each type of
Module 7
Tedventurous
(9-2) How can the WACC be both an average cost and a marginal cost?
The WACC is an average cost because it is a weighted average of the firm's component costs of capital.
However, each component cost is a marginal cost; that is, the
Module 7
Tedventuours
(9-2) How can the WACC be both an average cost and a marginal cost?
The WACC is an average cost because it is a weighted average of the firm's component costs of capital.
However, each component cost is a marginal cost; that is, the
Discussion 2-1
Our second discussion thread gets us into material dealing with basic
accounting principles and financial statement analysis (or financial ratio
analysis) in Chapters 3 and 4. As you will see after reading through the
text material, financi
Discussion 7-2
This week we complete the second portion of the topics related to asset
valuation when we focus on stock valuation in Chapter 10 (with debt/bond
valuation being covered in Chapter 9 prior to the mid-term exam).
Knowing what you do about the
Module 8
Tedventurous
(101)
a. Capital budgeting: The whole process of analyzing projects and deciding whether they should be included in the
capital budget.
Regular payback period: The number of years it takes a firm to recover its project investment. Pa
Chapter 5
FIN 500
Bonds, Bond Valuation, and
Interest Rates
Botao
1
Asset Valuation
Finance theory tells us the market
value of any asset (real or
financial) is determined as the PV
of the cash flows the asset is
expected to produce.
Bond valuation (CH5)
1.
o
o
o
You have completed Module Two if you:
Read the following in Financial Management: Principles and Applications:
Chapter 3: Understanding Financial Statements, Taxes, Cash Flows
Chapter 4: Financial Analysis Sizing Up Firm Performance
Participated
You have completed Module One if you:
1.
2.
o
o
o
Introduced yourself to the class through the Getting Started discussion
Read the following in Financial Management: Principles and Applications:
Chapter 1: Getting Started Principles of Finance
Chapter 2:
Adil Bouzouba
FIN 400
Report
Fall 2015
History of International Exchange Systems
Introduction
For centuries, domestic and international trade have paid in precious metals.
Until the late 1870s, gold and silver have coexisted as monetary instruments.
Bank
Discuss the value of foreign stocks in an investment portfolio. Do you want them?
If so, which ones? Do you diversify the classes as you would domestic stock? If so,
what classes would you select? Are there any countries you would avoid? What
about a stoc
Find a web article related to time value of money. Post a link to the article and
respond to the article, discussing why you find it especially interesting. Also, and
critically, how would you improve the analysis?
Time value of money or TMV, is the idea
Based on your reading and other sources, do corporations have any
responsibilities to society at large? Is stock price maximization good or bad for
society? Discuss why firms should behave ethically. Define ethically.
According to an article written by Jo
Class 4
FIN 500
Time Value of Money
Botao
1
Time Value Topics
Future value
Present value
Rates of return
Amortization
2
Determinants of Intrinsic Value:
The Present Value Equation
Net operating
profit after taxes
Required investments
in operating capital
Class 3
Fin 500
Risk, Return, and the Capital
Asset Pricing Model
Botao
1
Topics in Chapter
Basic return concepts
Basic risk concepts
Stand-alone risk
Portfolio (market) risk
Risk and return: CAPM/SML
2
Determinants of Intrinsic Value:
The Cost of Equity
FIN 500
Class 1
Overview of Financial
Management and the
Financial Environment
Botao An
1
Topics in Chapter
Forms of business organization
Objective of the firm: Maximize
wealth
Determinants of fundamental
value
Financial securities, markets and
instituti
FIN-500
Class 2
Analysis of Financial
Statements
Botao An
1
Topics in Chapter 3
Ratio analysis
Du Pont system
Effects of improving ratios
Limitations of ratio analysis
Qualitative factors
2
Determinants of Intrinsic Value:
Using Ratio Analysis
Net operati
CHAPTER 9
FIN 500
The Cost of Capital
Botao An
1
Stock pricing
Growth model is also called
Discounting cash flow model
Also called Gordon Growth Model.
is the last dividend that you dont
received.
2
Topics in Chapter
Cost of capital components
Debt
Prefer
Class 8
FIN 500
The Basics of Capital
Budgeting
Botao An
1
Topics
Overview and vocabulary
Methods
NPV
IRR, MIRR
Profitability Index
Payback, discounted payback
Unequal lives
Economic life
Optimal capital budget
2
The Big Picture:
The Net Present Value of
Discussion 3-2
This week's discussion activity (Discussion Activity #3 as developed
in Chapter 5 and 6) focuses on the time value of money. I think of
this chapter as a "tool kit" in the sense that decision-makers need to
understand the concept of time va
Discussion 4-2
This week's discussion activity covered in Chapter 7 and 8 brings us
to a very important topic in financial management (and personal
finance as well): risk and return. First, present a general definition
of risk as would a financier; that i
Discussion 1-2
Our first graded discussion activity deals with material from Chapters 1
and 2 regarding an overview of financial management, financial markets
and financial institutions. First, present and briefly discuss the primary
goal of the financial
Problem 18-2
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 7
Instructions to use the Solution Template
Enter the given values from the textbook in the below yellow colored cells
To find out the current state of Microsoft liquidity calculate the current r
Problem 14-2
Given
Book values
ST Debt
LT Debt
Common Equity
Total
Solution
As market values have to be considered for calculating weights
Weight of Debt
Weight of Equity
Problem 14-2
Given
Market Values
Enter the given
values from the text
book here
Solu