c01 the role of financial management.pptVIP

Financial Management; Tianjin Commercial University * * Financial Management; Tianjin Commercial University * * Chapter 1 The role of financial management (财务管理的作用) 1.1 What is financial management Financial management: activities devoted to the task of creating wealth for the firm’s owners or shareholders. Financial decisions: (1)When to introduce a new product; (2)When to invest in new assets; (3)When to replace existing assets; (4)When to borrow from banks; (5)When to issue shares (股票) or bonds (债券); (6)When to extend credit to a customer; (7)How much cash to maintain. 1.2 Goal of the firm The preferable (更可取的) goal of the firm: the maximization of the shareholder wealth, or the maximization of the price of the existing ordinary shares. Good decisions: decisions that create wealth for the shareholder. Investors reaction: investors react to poor company decisions by causing the total value of the firm’s shares to fall, and they react to good decisions by pushing up the price of the shares. 1.3 Legal forms of business organization 1. Sole proprietorship (独资企业) A business owned by a single individual. 2. Partnership (合伙企业) An association of two or more persons carrying on a business in common for profit. 3. Company (公司) An entity that legally functions separately and apart from its owners. 1.3 Legal forms of business organization 4. The role of a company’s financial manager CFO (Chief Financial Officer, 财务总监): financial planning, corporate strategic planning, cash flow. (1) Treasure (财务主管): cash and credit, capital expenditure (资本支出), raising funds, financial planning, foreign currency (外汇). (2) Financial Controller (会计主管): financial statements (财务报告), cost accounting, paying taxes (纳税), information system. 1.3 Legal forms of business organization 5. Interaction between the company and the financial Markets (金融市场) Primary market (一级市场): securities are of