Lecture 1: The Corporate Financial Manager
The Role of a Financial Manager
Valuations and Investment Decisions
o Capital Budgeting
Required Rate of Return
Free Cash Flows and Real Options
o Dividend Policy
Lecture 10: Financial Distress and Bankruptcy
The Capital-Structure Question with Financial Distress
The value of a firm is defined to be the sum of the value of the firms debt and the firms
o V =D + E
Is there oneratio of debt-to-equity that ma
Lecture 9 : The Effect of Taxes
The Interest Tax Deduction
Corporations pay taxes on their profits after interest payments are deducted. Thus,
interest expense reduces the amount of corporate taxes.
This creates an incentive to use debt.
Lecture 8: Capital Structure
The Capital-Structure Question
As we discussed earlier, the valueof a firm is defined to be the sum of the value of the
firms debt and the firms equity:
o Value =Debt + Equity
The questions we ask now are:Is there aratio of
Lecture 7: The Capital Asset Pricing Model
The Idea Behind the CAPM
The critical idea behind the capital asset pricing model (the CAPM) is that the returns to
financial securities, like stocks and bonds, are driving by the factors, the movements in
Lecture 6: Cash Flows
The Effect of Depreciation On Cash Flows
When evaluating a project we want to know when we actually paid for a piece of capital.
o We use capital expenditures to account for the cash outflow from the purchase
when it actually occurs
Lecture 5: Depreciation of Capital Expenditures
Differentiate between Capitalizing and Immediate Expensing
An expenditure is an asset if the firm:
o has acquired rights to future use as the result of a past transaction, and can
measure or quantify the fu
Lecture 4: The Income Statement
Sometimes called the statement of profit and loss
Provides information on profitability the terms net income, earnings, and profit are used
Is represented by the Basic Income Equation:
Lecture 3 Asset and Liability Recognition
Balance Sheet Measurement
There are two conceptual bases to measure the monetary amounts on thebalance sheet:
o The historical amount reflects the acquisition cost of assets or the amount of funds
Lecture 2: Introduction to Financial Accounting
What Is Financial Accounting?
Resource allocation decisions of investors and creditors depend on reliable and relevant
information about firms financial positions, profitability, and risk.
Lecture 11: Asymmetric Information
A situation in which parties have different information.
For example, when managers have superior information to investors regarding the firms
future cash flows.