chap1The Firm and The Financial Manager.pptVIP

Topics Covered Organizing a Business The Role of The Financial Manager Who Is The Financial Manager? Goals of the Corporation CEO Pay Organizing a Business Types of Business Organizations Sole Proprietorships Partnerships Corporations Hybrids Limited Partnerships LLP LLC PC Organizing a Business Corporate Structure The Role of The Financial Manager The Role of The Financial Manager Capital Budgeting Decision Buy real assets that are worth more than they cost The Role of The Financial Manager “Capital Budgeting” Who is The Financial Manager? Careers in Finance Goals of The Corporation Shareholders desire wealth maximization Do managers maximize shareholder wealth? Mangers have many constituencies “stakeholders” “Agency Problems” represent the conflict of interest between management and owners Goals of The Corporation Ethics Management Objectives Does value maximization justify unethical behavior? Enron example WorldCom example Arthur Andersen example Salomon Brothers example Goals of The Corporation Agency Problem Solutions 1 - Compensation plans 2 - Board of Directors 3 - Takeovers 4 - Specialist Monitoring 5 - Auditors CEO Pay Web Resources Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved 1- * Irwin/McGraw Hill Chapter 1 Fundamentals of Corporate Finance Fourth Edition The Firm and The Financial Manager Slides by Matthew Will Irwin/McGraw Hill Copyright ? 2003 by The McGraw-Hill Companies, Inc. All rights reserved Sole Proprietorships Corporations Partnerships Limited Liability Corporate tax on profits + Personal tax on dividends Unlimited Liability Personal tax on profits Financial Manager Firms operations Investors (1) Cash raised from investors (1) (2) Cash invested in firm (2) (3) Cash generated by operations (3) (4a) Cash reinvested (4a) (4b) Cash returned to investors (4b) Real assets Tangible Assets Euro Disney @ $2 billion Nontangible Assets Gillette’s Mach3 Razor @ $300 million Chief Financial Officer Treasurer Controlle