财务管理(英语教学).doc

Contents 1The Goal and Functions of Financial Management. 2Review of Accounting. 3Financial Analysis. 4Financial Forecasting. 5Operating and Financial Leverage. 6Working Capital and the Financing Decision. 7Current Asset Management. 8Sources of Short-Term Financing. 9Time Value of Money.10Valuation and Rates of Return.11Cost of Capital.12The Capital Budgeting Decision. 13Risk and Capital Budgeting. 14Capital Markets.15Investment Underwriting: Public and Private Placement.16Long-Term Debt and Lease Financing.17Common and Preferred Stock Financing.18Dividend Policy and Retained Earnings.19Convertibles and Warrants.20External Growth through Mergers.21International Financial Management.Grading Sheets.i 1 The Goals and Functions of Financial ManagementChapter Objectives1.Identify how finance builds on the disciplines of accounting and economics.2.Discuss the analytical decision making nature of finance within a risk-return framework.3.Describe the primary goal of finance as the maximization of shareholder wealth as measured by share price.4.Identify possible conflicting goals of finance such as social goals or management interests.5.Outline the activities of financial managers that are primarily based on the raising and investment of funds in an efficient manner.6.Identify some of the domestic and international economic conditions that the financial manager should consider.7.Identify the role of financial markets in allocating capital.ContentsI.Financial management is critical for a firms success.II.Finance relies upon the disciplines of economics and accounting.A.Economics provides structure to decision making and helps us to understand the economic environment in which the financial manager operates.B.Accounting provides the financial data needed for financial decision making.C.The demand for financial management skills exists in many sectors of our society, including corporate management, financial institutions and consulting.III. Finance as a field of study has evolved over time in response to changing business management needs.IV. Finance maintains that the goal of the firm is maximization of shareholders wealth.A.Shareholders wealth maximization is measured by the highest possible market price of the firms shares.B.Financial decision-making analysis is always predicated on this goal: to increase value to shareholders within a risk-return framework.C.Shoarehlders wealth maximization incorporates:D.The efficiency of the capital market dictates that, with a given level of risk, capital will flow to those firms promising the highest return.E.Maximization of shareholder wealth is tempered by social responsibility and agency concerns.V.Functions of Financial Management. A financial manager is responsible for financing an efficient level and composition of assets by obtaining financing through the most appropriate means.A.Daily financial management activitiesB.Less-routine activitiesC.Forms of organization: The finance function may be carried out within a number of different forms of organizations.1.Sole proprietorship2.Partnership3.CorporationVI.The Role of Financial Markets. Wealth maximization depends on the perception expectations of the market. The market through daily share price changes of each publicly traded company, provides managers with a performance report card.VII.Recent Economic Developments2 Review of AccountingChapter Objectives1.Demonstrate a reasonable ability to prepare the three basic financial statements.2.Identify the limitations of the income statment as a measure of a firms profitability.3.Identify the limitations of the balance sheet as a measure of a firms financial position.4.Explain the importance of cash flows as identified in the statement of changes in financial position.5.Outline the impact of corporate tax considerations on cash flow aftertax.6.Outline personal tax considerations as they relate to different forms of investment income.7.Explain the concept of tax savings. ContentsI.Financial StatementsA.The Income StatementB.Balance SheetC.Statement of Changes in Financial PositionII.Amortization and Funds FlowA.Amortization is an attempt to allocate an initial asset cost over its life.B.Amortization is an accounting entry and does not involve the movement of funds.C.As indicated in the statement of cash flows, amortization is added back to net income to arrive at cash flow.III.Free cash flow.IV.Income Tax Considerations3 Financial AnalysisChapter Objectives1.Calculate 13 financial ratios that measure profitability, asset utilization, liquidity and debt utilization.2.Assess a companys source of profitability using the Du Pont system of analysis.3.Examine the ratios in comparison to industry averages.4.Examine the ratios and company performance by means of trend analysis.5.Identify sources of distortion in reported income.ContentsI.Ratio analysisA.Uses of ratios:B.Overall considerations in using ratiosC.Classification and computation1.Profitability: Measures of returns on sales, total assets and invested capital2.Du Pont system.3.Asset utilization: Measures of the speed at which the firm is turning over accounts receivable, inventories, and longer term assets.4.Liquidity ratios: Measures of the firms ability to pay off short-term obligations as they come due5.Debt Utilization Ratios: Measures the prudence of the firms debt management policies.6.Summary and evaluation of all ratios for the Saxton Company with conclusions7.Trend analysis is as important as industry comparisonsD.Interpreting financial ratios.E.Trend analysis consists of computing the financial ratios of a firm at various points in time to determine if the firm is improving or deteriorating.F.Comparative analysis provides the management and external evaluators with information as to how successful the firm is relative to other firms in the industry.II.Impact of Inflation and Disinflation on Financial Analysis III.Other Elements of Distortion in Reported IncomeA.Recognition of revenueB.Handling of expensesC.Extraordinary gains/losses: These are reported as additions/deductions from income by some firms but not shown as additions/deductions from income by others, based on discretion.4 Financial Forecasting Chapter Objectives1.Explain why financial forecasting is essential for the healthy growth of the firm.2.Prepare the three financial statements for forecasting; the pro forma income statement, the cash budget and the pro forma balance sheet.3.Perform the percent-of-sales method for forecasting on a less precise basis.4.Determine the need for new funding resulting from sales growth.ContentsI.Need for Financial PlanningII.The most comprehensive means for doing financial planning is through the development of pro forma financial statements; namely the pro forma income statement, the cash budget, and the pro forma balance sheet.A.Pro Forma Income Statement:B.Cash budget: C.Pro Forma Balance Sheet: III.Percent-of-Sales Method: Shortcut, less exact, alternative for determining financial needsIV.Sustainable growth rate5 Operating and Financial LeverageChapter Objectives1.Define leverage as a method to magnify earnings available to the firms common shareholders.2.Define and calculate operating leverage and assess its opportunities and limitations.3.Define and calculate financial leverage and assess its opportunities and limitations.4.Define and calculate combined leverage.ContentsI.Leverage: The use of fixed charge obligations with the intent of magnifying the potential return to the firm.A.Fixed operating costs: B.Fixed financial costs: II.Break-Even Analysis and Operating LeverageA.Break-even analysis: B.Cash break-even analysisC. Operating leverage: III.Financial Leverage: A.Two firms may have the same operating income but greatly different net incomes due to the magnification effect of financial leverage. The higher the financial leverage, the greater the profits or losses at high or low levels of operating profit, respectively.B.Financial leverage is beneficial only if the firm can employ the borrowed funds to earn a higher rate of return than the interest rate on the borrowed amount. The extent of a firms use of financial leverage may be measured by computing its degree of financial leverage (DFL). The DFL is the ratio of the percentage change in net income (or earnings per share) in response to a percentage change in EBIT.IV.Combined Leverage6 Working Capital and the Financing DecisionChapter Objectives1.Define working capital management as the financing and controlling of current assets of the firm.2.Describe the nature of asset growth and explain those current assets that are more permanent in nature.3.Explain that the matching of sales and production may not be efficient in the short run, and will likely result in the buildup of current assets.4.Explain financing of assets in terms of hedging.5.Describe the term structure of interest rates and explain the theories that suggest its shape. Also discuss the value of the term structure to a financial manager.6.Identify risk and profitability in determining the financing plan for current assets.ContentsI.Working Capital ManagementA.Management of working capital is the financial managers most time-consuming function.B.Success in managing current assets in the short run is critical for the firms long-run existence.C.Nature of asset growthII.Both seasonal and permanent increases in working capital must be financed.III.The term structure of interest rates indicates the relative cost of short and long-term financing and is important to the financing decision.A.The relationship of interest rates at a specific point in time for securities of equal risk but different maturity dates is referred to as the term structure of interest rates.B.The term structure of interest rates is depicted by yield curves.C.There are three theories describing the shape of the yield curve.D.Types of yield curvesE.Yield curves shift upward and downward in response to changes in anticipated inflation rates and other conditions of uncertainty.IV.A Decision ProcessV.Shift in Asset StructureVI.Toward an Optimum Policy7 Current Asset ManagementChapter Objectives1.Outline current asset management as an extension of Chapter 6 concepts and recognize that a firms investment in current assets should achieve an acceptable return.2.Discuss cash management as the control of receipts and disbursements to minimize nonearning cash balances and describe techniques to make cash management more efficient. 3.Define the various marketable securities available to the firm and calculate the yield on these instruments.4.Describe accounts receivable as an investment based on the firms credit policies, outline the considerations in granting credit and evaluate a credit decision to change credit terms to stimulate sales.5.Describe inventory as an investment and apply techniques to reduce the costs of this investment.6.Explain the concept that the less liquid an asset is, the higher the required return. ContentsI.Cash ManagementA.Cash is a necessary but low earning asset.B.Financial managers attempt to minimize cash balances and yet maintain sufficient amounts to meet obligations in a timely manner.C.The three main reasons for holding cash are for:D.Temporarily, excess cash balances are transferred into interest-earning marketable securities.II.Collections and DisbursementsIII.Marketable SecuritiesIV.Management of Accounts ReceivableA.Accounts receivable represent a substantial and growing investment in assets by a company. The primary reasons for the increases have been:B.Accounts receivable are an investment.C.There are three primary variables for credit policy administration.IV.Inventory ManagementA.Inventory is the least liquid of current assets.B.There are two basic costs associated with inventory:1.Carrying costs:2.Ordering and processing costsC.Assumptions of the basic EOQ model:8 Sources of Short-Term FinancingChapter Objectives1.Describe trade credit as an important form of short term financing and be able to calculate its cost to the firm if a discount is forgone.2.Describe bank loans as self-liquidating, as short-term and as having their interest rate tied to the prime rate. Also calculate interest rates under differing conditions.3.Describe commercial paper as a short-term, unsecured promissory note of the firm.4.Review borrowing in foreign markets as a cost-effective alternative for the firm.5.Explain that offering accounts receivable and inventory as collateral may lower the interest costs on a loan.6.Demonstrate the hedging of interest rates to reduce borrowing risk. ContentsI.Trade CreditII.Bank CreditA.Banks prefer short-term, self-liquidating loansB.Bank loan terms and conceptsD.Bank credit availability tends to cycleIII.Commercial PaperIV.Bankers AcceptancesV.Foreign BorrowingVI.The Use of Collateral in Short-Term FinancingVII.Inventory FinancingA.The collateral value of inventory is based on several factors.B.Inventory financing and the associated control methods are standard procedures in many industries.VIII.Hedging to Reduce Borrowing Risk9 Time Value of MoneyChapter Objectives1.Explain the concept of the time value of money. This is the idea that a dollar received today is worth more than a dollar received in the future.2.Calculate present values, future values, and annuities based on the number of periods involved and the going interest rate.3. Calculate yield based on the time relationships between cash flows. ContentsI.Money has a time value associated with it.A.The investor/lender demands that financial rent be paid on his or her funds. B.Understanding the effective rate on a business loan, the return on an investment, etc., is dependent on using the time value of money.D.The interest rate is also referred to as a discount rate, rate of return, or yield.II. Future Value - Single AmountIII.Effective or Nominal Interest RateIV.Present Value - Single AmountV.Future Value - AnnuityVI.Present Value - AnnuityVII.Annuity Equaling a Future ValueVIII.Annuity Equality a Present ValueIX.Determining the Yield on an InvestmentX.Special Considerations in Time Value AnalysisXI.Canadian Mortgages10 Valuation and Rates of Return Chapter Objectives1.Describe valuation of a financial asset as based on the present value of future cash flows.2.Explain that the required rate of return in valuing an asset is based on the risk involved.3.Calculate the current value (price) of bonds, preferreds (perpetuals) and common shares based on the future benefits (cash flows).4.Calculate the yields on financial claims based on the relationship between current price and future expected cash flows.5.Describe the use of a price-earnings ratio to determine value.ContentsI.Valuation ConceptsII.Valuation of BondsIII.Valuation of Preferred StockA.Preferred stock IV.Valuation of Common Stock1.No growth 2.Constant growth in dividends. 11 Cost of CapitalChapter Objectives1.Explain that the cost of capital represents the overall cost of financing to the firm.2.Define the cost of capital as the discount rate normally used to analyze an investment. It is an evaluation tool.3.Calculate the cost of capital based on the various valuation techniques from Chapter 10 as applied to bonds, preferred stock and common shares.4.Describe how a firm attempts to find a minimum cost of capital through varying the mix of its sources of financing.5.Explain the marginal cost of capital concept.ContentsI.The Overal