* * Most Important Skills Needed by CFOs Source: Source: CIO Enterprise... * • As of May 2006, 35 of the 500 largest companies in the US had a female CFO • Five largest companies with
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McGraw-Hill/Irwin
Nickels McHugh McHugh
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Financial Management
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• What is Financial Management?
• Finance
• Financial Manager
• Importance of Finance
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Most Important Skills Needed by CFOs
Source:
Source: CIO Enterprise
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• As of May 2006, 35 of the 500 largest companies in the US had a female
CFO
• Five largest companies with female CFO: Citigroup, Home Depot,
Verizon, Marathon Oil, and Medco Health Solutions
• Top 3 reasons that helped women achieve their current position:
Supportive boss, Supportive spouse, and culture of the organization
Source : : cfo.com, June 1, 2006
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Non-Finance Functions of CFOs
Source: CIO Enterprise
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Where CFOs Get Their Financial Information
Source : USA Today :
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Financial Managers:
Ask Your Clients
1 What are the client's goals in areas like
lifestyle, retirement, saving for college education and their health care as well as that
of their dependents?
2 When do they want to reach their goals?
3 What steps have they already taken toward
achieving their goals?
4 How do they feel about taking investment risks
for a potential higher rate of return?
5 How involved do they want to be in monitoring
their progress toward their goals?
Source : : Fpanet.org
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Financial Plan
Operating Budget
Financial Controls
Cash Budget
Capital Budget
Long-term Forecasting
Short-term Forecasting
Feedback Feedback
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• Financial Plan- Financial Statements
• Types of Budgets
• Capital
• Operating (Master)
• Financial Controls- Feedback
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• Controlling credit operations
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Short-Term Funds
• Meeting monthly
expenses
• Unanticipated
emergencies
• Cash-flow problems
• Expanding current
inventory
• Temporary
promotional programs
Long-Term Funds
• New product development
• Replacing capital expenditure
• Mergers or acquisitions
• Expansion into new markets
• Building new facilities
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Daily Profits Of Companies With The Highest Revenue
• Wal-Mart - $24.8 Million
• ExxonMobil - $58.9 Million
• General Motors - $10.5 Million
• Ford - $1.4 Million
• General Electric - $41.1 Million
• ChevronTexaco - $19.8 Million
Source: World Feature Syndicate, 2005
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Short-Term
• Trade Credit
• Promissory Notes
• Family/Friends
• Banks, etc.
• Factoring
• Commercial Paper
• Credit Cards
Long-Term
• Debt
• Equity
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1 Federal, state, and local
governments
2 Federal government
agencies
3 Corporations
4 Foreign governments and
corporations
Who Can Issue Bonds?
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Equity Capital
Equity Capital
Internal Sources Internal Sources
External Sources External Sources
Retained Earnings
Retained Earnings Owner Contribution
s
Owner Contribution
s Sale of Partnerships
Sale of Partnerships
Venture Capital
Venture Capital
Public Sale of
Stock Public Sale of
Stock
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Summer of 2006
• 89 companies filed plans to raise money
through IPO – looking to raise $16.3 billion
• 17 companies withdrew their plans to proceed
with their IPO – were hoping to raise $3.89
billion
• Withdrawing – Go Daddy Group and PNY
Technologies
• Filing – Double-Take Software and
Hansen Medical
Source : : redherring.com, August 18, 2006
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• Launched – August 2004
• IPO Price $ 85 per share
• Seeking to raise $2.7 billion
• Unusual auction-style offering
• With IPO, the company must shed light on the inner workings
• Key competitors – Yahoo and Microsoft
• As of March 31, 2004 Google employed about 1,900 employees
Source : : cnet news.com, April 30, 2004; Forbes, September 17, 2004
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• Finance new and rapidly growing companies
• Purchase equity securities
• Assist in the development of new products or services
• Add value to the company through active
participation
• Take higher risks with the expectation of higher rewards
• Have a long-term orientation
Source : : NVCA.com
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Common Stock $ 50,000
Bonds (@10%) $450,000
Funds Raised $500,000
Earnings $ 125,000
Less: Bond Interest $ 45,000
Total Earnings $ 80,000
Return to $80,000
Stockholders $50,000
Common Stock $500,000 Bonds (@10%) 0
Earnings $ 125,000
Total Earnings $ 125,000
Return to $125,000 Stockholders $500,000
Leverage- Selling
Bonds
Equity- Sale of Stock