公司理财(罗斯)第1章(英文).ppt

1-0,CHAPTER,1,Introduction to Corporate Finance,/jmjiaoxue,1-1,Chapter Outline,1.1 What is Corporate Finance? 1.2 Corporate Securities as Contingent Claims on Total Firm Value 1.3 The Corporate Firm 1.4 Goals of the Corporate Firm 1.5 Financial Markets 1.6 Outline of the Text,1-2,What is Corporate Finance?,Corporate Finance addresses the following three questions: What long-term investments should the firm engage in? How can the firm raise the money for the required investments? How much short-term cash flow does a company need to pay its bills?,1-3,The Balance-Sheet Model of the Firm,1-4,The Balance-Sheet Model of the Firm,Current Assets,Fixed Assets 1 Tangible 2 Intangible,Shareholders Equity,Current Liabilities,Long-Term Debt,What long-term investments should the firm engage in?,The Capital Budgeting Decision,1-5,The Balance-Sheet Model of the Firm,How can the firm raise the money for the required investments?,The Capital Structure Decision,Current Assets,Fixed Assets 1 Tangible 2 Intangible,Shareholders Equity,Current Liabilities,Long-Term Debt,1-6,The Balance-Sheet Model of the Firm,How much short-term cash flow does a company need to pay its bills?,The Net Working Capital Investment Decision,Net Working Capital,Shareholders Equity,Current Liabilities,Current Assets,Fixed Assets 1 Tangible 2 Intangible,Long-Term Debt,1-7,Capital Structure,The value of the firm can be thought of as a pie,it will depend on how well the firm has made its investment decision,The goal of the manager is to increase the size of the pie.,The Capital Structure decision can be viewed as how best to slice up a the pie.,If how you slice the pie affects the size of the pie, then the capital structure decision matters.,50% Debt,50% Equity,1-8,Hypothetical Organization Chart,1-9,The Financial Manager,To create value, the financial manager should: Try to make smart investment decisions. Try to make smart financing decisions.,1-10,Cash flow from firm (C),The Firm and the Financial Markets,Taxes (D),Firm issues securities (A),Retained cash flows (F),Invests in assets (B),Dividends and debt payments (E),Current assets Fixed assets,Short-term debt Long-term debt Equity shares,Ultimately, the firm must be a cash generating activity.,The cash flows from the firm must exceed the cash flows from the financial markets.,1-11,Multiple choice,1.Which of the following is not considered one of the basic questions of corporate finance? A) What long-lived assets should the firm invest? B) How much inventory should the firm hold? C) How can the firm raise cash for required capital expenditures? D) How should the short-term operating cash flows be managed? E) All of the above.,1-12,2.The balance sheet is made up of what five key components? A) Fixed assets, current liabilities, long term debt, tangible current assets and shareholders equity B) Intangible fixed assets, current liabilities, long-term debt, net income and current assets C) Fixed assets, long-term debt, current assets, current liabilities and shareholders equity D) Current assets, fixed assets, long term debt, shareholders equity and retained earnings E) None of the above.,1-13,3. Capital structure is defined as the major financing of the firm. The capital structure is divided A) between debtors and creditors. B) creditors and shareholders. C) assets and liabilities. D) All of the above. E) None of the above.,1-14,4. In the managerial structure of the corporation the two officers and their responsibilities that report directly to the Chief Financial Officer (CFO) are A) the credit manager who handles accounts receivable and the tax manager who minimizes tax payments. B) the personnel manager who manages salaries and compensation, and the production operations manager who manages facility operations. C) the treasurer who is responsible handling cash flow and making financial decisions and the tax manager who minimizes tax payments. D) the controller who manages the accounting function and the treasurer who is responsible handling cash flow and making financial decisions. E) None of the above.,1-15,1.2 Corporate Securities as Contingent Claims on Total Firm Value,The basic feature of a debt is that it is a promise by the borrowing firm to repay a fixed dollar amount of by a certain date. The shareholders claim on firm value is the residual amount that remains after the debtholders are paid. If the value of the firm is less than the amount promised to the debtholders, the shareholders get nothing.,1-16,Debt and Equity as Contingent Claims,$F,Debt holders are promised $F.,If the value of the firm is less than $F, they get the whatever the firm if worth.,If the value of the firm is more than $F, debt holders get a maximum of $F.,If the value of the firm is less than $F, share holders get nothing.,If the value of the firm is more than $F, share holders get everything above $F.,Algebraically, the bondholders claim is: Min$F,$X,Algebraically, the shareholders claim is: Max0,$X $F,1-17,$F,Debt holders are promised $F.,If the value of the firm is less than $F, the shareholders claim is: Max0,$X $F = $0 and the debt holders claim is Min$F,$X = $X. The sum of these is = $X,If the value of the firm is more than $F, the shareholders claim is: Max0,$X $F = $X $F and the debt holders claim is: Min$F,$X = $F. The sum of these is = $X,Combined Payoffs to Debt and Equity,1-18,Example1,Suppose debtholders are promised $100,the firms value is $75, how much will the debtholders and stockholders get? In this case, the debtholders will get $75=min(75,100), the stockholders will get nothing! The stockholders claim= max(0,75-100)=0,1-19,Example 2,If the firms value is $200,the firm has promised to pay the debtholder $100, how much will the debtholder and stockholders get? The debtholder will get $100=min(100,200), the stockholders will get $100=max0,(200-100).,1-20,Multiple choice,The Simple Corporation has outstanding obligation to the Complex Corporation of $250. It is year-end and the total cash flow of Simple from all sources is $325. The contingent payoff to the debtholders and the shareholders is A) $250; $325 B) $75; $250 C) $250; $75 D) $325; $250 E) None of the above.,1-21,1.3 The Corporate Firm,The corporate form of business is the standard method for solving the problems encountered in raising large amounts of cash. However, businesses can take other forms.,1-22,Forms of Business Organization,The Sole Proprietorship(p10) A sole proprietorship is a business owned by one person. The Partnership: any two or more persons can get together and form a partnership. General Partnership: all partners agree to provide some fraction of work and cash and to share the profits and losses Limited Partnership: permit the liability of some of the partners to be limited to the amount of cash each has contributed to the partnership,1-23,The Corporation A corpotation is a legal entity, it can have a name and enjoy many of the legal power of natural persons( enter into contracts and may sue and be sued) Advantages Liquidity and Marketability of Ownership: ownership can be readily transfererred Liability: limited liability Continuity of Existence: unlimited life Disadvantages Tax Considerations:double taxation,1-24,A Comparison of Partnership and Corporations(p13),1-25,1.4 Goals of the Corporate Firm,The traditional answer is that the managers of the corporation are obliged to make efforts to maximize shareholder wealth.,1-26,The Set-of-Contracts Perspective,The organisation,Interest group,Investor,The public,Suppliers,Government,Media,Consumers,Industry bodies,Employees,1-27,The Set-of-Contracts Perspective,The firm can be viewed as a set of contracts. One of these contracts is between shareholders and managers. The managers will usually act in the shareholders interests. The shareholders can devise contracts that align the incentives of the managers with the goals of the shareholders. The shareholders can monitor the managers behavior. This contracting and monitoring is costly.,1-28,Agency costs,The cost of resolving the conflicts of interest between managers and shareholders are called agency costs. These costs are defined as the sum of (1) the monitoring costs of the shareholders and (2) the costs of implementing control devices.,1-29,Managerial Goals,Managerial goals may be different from shareholder goals Willimson proposes the notion of Expensive preference: managers obtain value from certain kinds of expenses. According to Donaldson: Survival Independence The basic financial objective of managers is the maximization of corporate wealth.,1-30,Separation of Ownership and Control,Board of Directors,Management,Assets,Debt,Equity,Shareholders,Debtholders,1-31,Do Shareholders Control Managerial Behavior?,Shareholders vote for the board of directors, who in turn hire the management team. Contracts can be carefully constructed to be incentive compatible. There is a market for managerial talentthis may provide market discipline to the managersthey can be replaced. If the managers fail to maximize share price, they may be replaced in a hostile takeover.,1-32,1.5 Financial Markets,The financial markets are composed of the money markets and the capital markets. Money markets are the markets for debt securities that will pay off in the short term( usually less than one year). Capital markets are the markets for long-term debt (with a maturity at over one year) and for equity shares.,1-33,1.5 Financial Markets,The financial markets can be classified further as the primary market and the secondary markets. Primary Market When a corporation issues securities, cash flows from investors to the firm. Usually an underwriter is involved Secondary Markets Involve the sale of “used” securities from one investor to another . There are two kinds of secondary markets: the auction markets and the dealer markets. The equity securities of most large U.S firms trade in organized auction markets such as the New York Stock Exchange (NYSE),the American Stock Exchange Most debt securities are traded in dealer markets. Securities may be exchange traded or trade over-the-counter in a dealer market.,1-34,Financial Markets,Firms,Investors,Sue,Bob,1-35,Exchange Trading of Listed Stocks,Auction markets are different from dealer markets in two ways: Trading in a given auction exchange takes place at a single site on the floor of the exchange. Transaction prices of shares are communicated almost immediately to the public.,1-36,1.6 Outline of the Text,Overview Value and Capital Budgeting Risk Capital Structure and Dividend Policy Long-Term Financing Options, Futures and Corporate Finance Financial Planning and Short-Term Finance Special Topics,1-37,Part II describes how investment opportunities are valued in financial markets. This part contains basic theory. Because finance is a subject that builds understanding from the ground up, the material is very important. The most important concept in Part II is net present value. We develop the net present value rule into a tool for valuing investment alternatives. We discuss general formulas and apply them to a variety of different financial instruments.,1-38,Part III introduces basic measures of risk. The capital-asset pricing model (CAPM) and the arbitrage pricing theory (APT) are used to devise methods for incorporating risk in valuation. As part of this discussion, we describe the famous beta coefficient. Finally, we use the above pricing models to handle capital budgeting under risk.,1-39,Part IV examines two interrelated topics: capital structure and dividend policy. Capital structure is the extent to which the firm relies on debt. It cannot be separated from the amount of cash dividends the firm decides to pay out to its equity shareholders.,1-40,Part V concerns long-term financing. We describe the securities that corporations issue to raise cash, as well as the mechanics of offering securities for a public sale. Here we discuss call provisions, warrants, convertibles, and leasing. Part VI discusses special contractual arrangements called Options.,1-41,Part VII is devoted to financial planning and short-term finance. The first cha