Corporate finance chapter 01 what is finance

Chapter 1: What is Finance?. Objective To Define Finance The Value of Finance.

Chapter 1:

What is Finance?

Objective

To Define Finance The Value of Finance

Chapter 1 Contents

• 1 Defining Finance

• 2 Why Study Finance

• 3 Household Finance

• 4 Financial Decisions Firms

• 5 Forms of Business

Organization

• 6 Separation of Ownership

and Management

• 7 The Goal of management

• 8 Market

Discipline Takeovers

• 9 Role of the Financial

Specialists in a Corporation

Important Terms

• Assets

• Personal investing & Asset allocation

• Liability, Debt

• Net Worth = Assets - Liabilities

• Exogenous and endogenous elements

(1.9) The Roles of Corporate Financial Specialists

• Financial executive a person with authority in the following functions:

V P O p e r a t i o n s

T r e a s u r e r V P F i n a n c i a l P l a n n i n g C o m p t r o l e r

C h i e f F i n a n c i a l O f f i c e r V P M a r k e t i n g

C h i e f E x e c u t i v e O f f i c e r

B o a r d o f D i r e c t o r s

Financial Functions in a Corporation:

• Planning

• Provision of Capital

• Administration of Funds

• Accounting and Control

• Protection of Assets

• Tax Administration

• Investor Relations

• Evaluation and Consulting

– long and short-term financial planning – budgeting for capital expenditures

– budgeting for operations

– sales forecasting

– performance evaluation

– pricing policies

– economic appraisals

Accounting and Control

– establishment of accounting policies

– development & reporting of accounting data

– cost standards

– internal auditing

– systems and procedures (accounting)

– government reporting

– reporting & interpreting operations results

– comparing performance with operating plans and