CHAP 1 OVERVIEW OF FINANCIAL MANAGEMENT.pptx

overview of financial management

1. OVERVIEW FINANCIAL MANAGEMENT

2. 01 02 03 BRAINSTORMING BEFORE BUILDING BUSINESS What lines of business? What kind of building and equipment we need? Where will we get long-term financing to pay for investment? How will we manage everyday financial activities?

3. WHAT IS FINANCIAL MANAGEMENT? Study how people and business evaluate investment and raise funds to finance them.

4. Directing = process of guiding, supervising, leading, and motivating employees to accomplish organizational goals Planning = process of determining in advanced what actions to take and how to take them to achieve specific goals Organizing = Synchronization in order to utilizing financial resources in efficient way to achieve goals effectively Controlling = Involves evaluating and regulating the performance of an organization to ensure it aligns with predetermined goals and standards.

5. CORPORATE FINANCE Thynk Unlimited 01 MANAGING FINANCIAL RESOURCES STRUCTURING CAPITAL AND MAKING INVESTMENT DECISIONS 02 MAXIMIZING VALUE OF STAKEHOLDERS MAKING DECISION THAT BENEFIT ALL GROUPS, RATHER THAN JUST FOCUSING ON MAXIMIZING SHAREHOLDERS VALUE 03 BALANCING RISKS MITIGATING POTENTIAL RISKS WHILE MAXIMIZING RETURN

6. INVESTMENT DETERMINES THE PRICE OF FINANCIAL ASSETS? POTENTIAL RISK AND REWARD ASC WITH INVESTING IN FINANCIAL ASSETS? BEST MIXTURE OF THE DIFFERENT TYPES OF FINANCIAL ASSETS TO HOLD

7. Process of planning and managing a firm’s long-term investments Evaluating the size, timing, and risk of future cash flow Mixture of long-term debt and equity uses to finance its operations How much should firm borrow? What are the least expensive sources to funds for the firm? Firm short-term assets Making sure firm has sufficient roesources to continue its operations Avoid costly interruptions FINANCIAL MANAGEMENT DECISIONS CAPITAL Budgeting CAPITAL STRUCTURE working capital management

8. BUSINESS FORM OWNED BY 1 PERSON LEAST REGULATED FORM OF ORGANIZATION OWNER KEEPS ALL THE PROFITS SOLE PROPRIETORSHIP PERSONAL ASSETS FOR SETTLING LIABILITIES LIMITED LIFE SPAN LIMITED AMOUNT OF EQUITY

9. BUSINESS FORM OWNED BY 2 PERSON OR MORE INFORMAL AGREEMENT EASY AND INEXPENSIVE TO FORM TAXED AS PERSONAL INCOME TO THE PARTNERS PARTNERSHIP PERSONAL ASSETS FOR SETTLING LIABILITIES LIMITED LIFE SPAN LIMITED PARTNER NOT DEEPLY INVOLVED IN BUSINESS DECISION DIFFICULT TRANSFERRING OWNERSHIP

10. BUSINESS FORM DISTINCT LEGAL ENTITY OWNED BY ONE OR MORE INDIVIDUALS/ENTITIES OWNERSHIP CAN BE READILY TRANSFERRED BY SHARE OF STOCK LIFE OF CORPORATION IS NOT LIMITED CORPORATION MORE COMPLICATED THAN THE OTHER FORM OF BUSINESS DOUBLE TAXATION

11. AGENCY PROBLEM MANAGERIAL COMPENSATION CONTROL OF THE FIRM stockholders ensures that managers act according to stockholders’ interest PRINCIPAL & AGENT Managers will act in the Stockholders’ Interest if they have a significant economic incentive to increase share value

12. PRIMARY VS SECONDARY PRIMARY MARKET SECONDARY MARKET Involves one owner or creditor selling to another Dealer and auction markets Trading in corporate securities Listing MARKET Refers to the original sale of securities by government and corporations Corporation = seller, Public offering and private placement

13. NEXT WEEK PRESENTATION: Give the explanation of financial ratios (Liquidity, Leverage, Profitability, Efficiency, Market Value) Explain DuPont Analysis! The importance of evaluating financial statement!

14. THANK YOU FOR YOUR NICE ATTENTION