文档介绍：CHAPTER 1 Overview of Financial Management and the Financial Environment
Financial management
Forms of anization
Objective of the firm: Maximize wealth
Determinants of stock pricing
The financial environment
Financial instruments, markets and institutions
Interest rates and yield curves
Why is corporate finance important to all managers?
Corporate finance provides the skills managers need to:
Identify and select the corporate strategies and individual projects that add value to their firm.
Forecast the funding requirements of pany, and devise strategies for acquiring those funds.
Sole proprietorship
Partnership
Corporation
What are some forms of anization pany might have as it evolves from a start-up to a major corporation?
Advantages:
Ease of formation
Subject to few regulations
No corporate e taxes
Disadvantages:
Limited life
Unlimited liability
Difficult to raise capital to support growth
Starting as a Sole Proprietorship
A partnership has roughly the same advantages and disadvantages as a sole proprietorship.
Starting as or Growing into a Partnership
ing a Corporation
A corporation is a legal entity separate from its owners and managers.
File papers of incorporation with state.
Charter
Bylaws
Advantages:
Unlimited life
Easy transfer of ownership
Limited liability
Ease of raising capital
Disadvantages:
Double taxation
Cost of set-up and report filing
Advantages and Disadvantages of a Corporation
ing a Public Corporation and Growing Afterwards
Initial Public Offering (IPO) of Stock
Raises cash
Allows founders and pre-IPO investors to “harvest” some of their wealth
Subsequent issues of debt and equity
Agency problem: managers may act in their own interests and not on behalf of owners (stockholders)
The primary objective should be shareholder wealth maximization, which translates to maximizing stock price.
Should firms behave ethically? YES!
Do firms have any responsibilities to society at large? YES! Shareholders are also members of society.
What s