1 / 18

Finance

Finance. Concepts & Current Topics. Course Detail. Basic financial language Conceptual skills Emphasis is on applying concepts to current financial topics Reading & team intensive Complete readings before class. Resources. FFM – Fundamentals of financial management

blithe
Download Presentation

Finance

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Finance Concepts & Current Topics

  2. Course Detail • Basic financial language • Conceptual skills • Emphasis is on applying concepts to current financial topics • Reading & team intensive • Complete readings before class

  3. Resources • FFM – Fundamentals of financial management • FMR – Fundamentals of finance reader • CFE – Course of financial English • Handouts/Website postings for current topics

  4. Course overview by week • 1 Introduction • 2 Fundamental concepts • 3 Financial assets • 4 Capital budgeting • 5 Capital structure • 6 Working capital • 7 Midterm exam • 8 Derivatives • 9 multinationals • 10 hybrids • 11 central banks • The Fed & PBOC • World Bank & IMF • Exchange rates • 2008 financial crisis • Final exam

  5. Assessments • Team presentations • Debates (maximum 10 bonus points) • Case presentations • Team formation due January 17 • Quizzes (2) • Examinations (midterm & final) • Open book & notes

  6. Contact Information • Office: 20/F Building B, S&T Plaza, TUSP, No. 1 • Telephone: 15810169471 • Email: popham10@yahoo.com • Website: www.schoolrack.com/BillCurtis

  7. An Overview of Financial Management Chapter 1

  8. Financial management areas • Money & capital markets • Investments • Financial management

  9. Money & capital markets • Money • A commodity or asset, such as gold, an officially issued currency, coin or paper note, that can be legally exchanged for something equivalent, such as goods or services.  • Capital • Financial assets or the financial value of assets, such as cash, available for use • Capital markets • Financial markets that facilitate the flow of long-term funds

  10. Current trends in finance • Globalization • Is McDonald’s an American company? • Over 60% of its net income is generated outside the U.S. • Information technology • Space • Time • Information access • Electronic commerce

  11. Forms of business organization • Sole proprietorships • Partnerships • Corporations

  12. Sole proprietorship • Unincorporated business owned by an individual • Advantages • Easy and inexpensive to start • Few government regulations • Avoids corporate income taxes • Disadvantages • Difficult to obtain capital • Unlimited liability • Legal debts or obligations that arise during the course of business operations.  • Life of the business limited to the life of the owner

  13. Partnership • An unincorporated business owned by 2 or more persons • Advantages are similar to sole proprietorships, plus: • Specialized expertise • Synergy among partners (1+1=3?) • Disadvantages • Unlimited liability • Limited life of the organization • Difficulty in transferring ownership • Mutual obligations • Difficulty to raise large amount of capital

  14. Corporation • A legal entity (person) separate from its owners and managers • Advantages • Unlimited life • Easy transferability of ownership • Limited liability • Can raise large amount of capital (stocks & bonds) • Disadvantages • Setting up a corporation • Double taxation (corporate and earnings paid out as dividends) • Subject to take-over

  15. Staff and management goals • Financial staff responsibility: • obtain and use funds to maximize the value of the firm • Management responsibility: • Maximize stockholder’s wealth = maximize stock value • Other responsibilities? • Ben & Jerry’s? • Business ethics—company’s attitude and conduct toward its employees, customers, suppliers, community, employees, stockholders

  16. Agency relationships • Principals hire agents to perform services (delegation) • Financial management’s agency relationships: • Stockholders and managers • Managers and debt holders (creditors) • Agency problem • A potential conflict of interests between the agent and stockholders or creditors

  17. Agency relationships • Motivating managers to act in the stockholders best interests • Performance shares • Executive stock options • Direct intervention by stockholders (institutional investors) • Threat of firing • Threat of hostile take-over

  18. Managerial actions to maximize shareholder wealth • What determines the price of a company’s stock? Factors include: • A financial asset is related to its ability to generate cash flows • Timing of cash flows—sooner is better • Investors are risk averse—they’ll pay more for stock that generates consistent cash flows • Investment decisions • How to finance the firm • Debt & equity mix • Dividend policy decision—what to give out, what to retain

More Related