财务管理基础英文摘要.doc

| Foundations of Financial ManagementPart 1 IntroductionChapter 1 The Goals And Functions of Financial ManagementSummary n This chapter traces the evolution and interrelationships of finance as a field of study and the role of the financial manager in a dynamic economy.1. The field of Finance. n A. The field of finance is closely related to economics and accounting.n 1. Economics provides a structure for decision-making in such areas as:n a. Risk analysis.n b. Price theory.n c. Comparative return analysis.1. The field of Finance. n 2. Economics provides the broad picture of the economic environment including the:n a. Institutional structure of the Federal Reserve System.n b. Commercial banking system.n c. Interrelationships between various economic sectors.1. The field of Finance. n 3. Accounting, sometimes said to be the language of finance, provides financial data through income statements, balance sheets, and the statement of cash flows.n 4. Finance links economic theory with accounting data. All corporate managers must be familiar with such data in order to assess the financial performance of the firm.1. The field of Finance. n B. The demand for financial management skills exists in many sectors of a global society including corporate management, financial institutions, and consulting.2. Finance as a field of study has evolved over time in response to changing business management needs.n A. Finance achieved recognition as a separate field of study in response to the creation of giant corporations at the turn of the century.n B. The worst depression in United States history caused a shift in emphasis from rapid merger growth to preservation of capital, liquidity, reorganization, and the bankruptcy process.2. Finance as a field of study has evolved over time in response to changing business management needs.n C. The most significant step in the evolution of contemporary financial management began in the mid-1950s.Emphasis was placed on the analytically determined employment of resources within the firm. The decision-making nature of financial management was manifested in the enthusiasm for the study of:2. Finance as a field of study has evolved over time in response to changing business management needs.n 1. Allocation of financial capital for the purchase of real capital (plant and equipment).n 2. Efficient utilization of current assets.n 3. Capital structure theory.n 4. Dividend policy.2. Finance as a field of study has evolved over time in response to changing business management needs.n D. The analytical orientation of financial management focused on risk-return relationships and the desire to maximize return at a given level of risk.n E. The rapid inflation experienced in the economy in the 1970s and early 1980s followed by a lengthy period of disinflation has impacted all areas of financial decision-making.2. Finance as a field of study has evolved over time in response to changing business management needs.n F. The technological changes in the 1990s rapidly impacted the financial management functions of business firms. E-commerce accelerated cash flows and significantly affected the management of inventory and accounts receivable. Financial managers must remain sensitive to the impacts of e-commerce and the internet on finance functions in the 21st century.3. 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.n A. Daily financial management activities.n 1. Credit management.n 2. Inventory control.n 3. Receipt and disbursement of funds.n B. Less-routine activities.n 1. Sale of stocks and bonds.n 2. Capital budgeting.n 3. Dividend decisions.3. 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.n C. Forms of organization: The finance function may be carried out within a number of different forms of organizations:n 1. Sole proprietorship.n a. Single ownership.n b. Simplicity of decision making.n c. Low organizational and operating costs.n d. Unlimited liability.n e. Earnings of the proprietorship are taxed as personal earnings of the individual owner.3. 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.n 2. Partnership.n a. Two or more partners.n b. Usually formed by articles of partnership agreement.n c. Unlimited liability for all partners unless a limited partnership is formed which provides limited liability for one or more partners. At least one partner must be a general partner.n d. Earnings are taxed as personal earnings of partners.3. 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.n 3. Corporation.n a. Most important form of business in terms of revenue and profits.n b. Legal entity.n c. Formed by articles of incorporation.n d. Stockholders (owners) have limited liability.n e. Easy divisibility of ownership.3. 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.n 3. Corporation.n f. Managed by the board of directors.n g. Double taxation of earnings: Earnings of the corporation are subject to the corporate income tax; dividends (distributed net income) are subject to personal taxation. Small subchapter S corporations, however, avoid the double taxation disadvantage.4. Goals of Financial Management.n A. Are the goals of the three basic forms of business organizations the same? Does the management of a corporation make the same decision that a sole proprietor would make?n B. Agency theory, a major area of financial research, focuses on the relationship between the owners of a firm and the managers of the firm.4. Goals of Financial Management.n C. Because of their large percentage of ownership, mutual funds and pension funds can influence the decisions of major U.S. companies.n D. Alternative goals.n 1. Profit maximization (or maximizing earnings per share) has several drawbacks.n a. Does not capture risk effects.n b. Fails to consider the timing of the benefits.n c. Variations in definitions of profit cause measurement problems.n d. Inflation and international currency transactions complicate the issue.4. Goals of Financial Management.n 2. Maximization of owners wealth or shareholder wealth maximization if the firm is a corporation is the goal of the firm. Valuation is the key concept of this goal. The valuation process captures the timing of the expected cash flows and the risk associated with the cash flows.4. Goals of Financial Management.n E. Incentives for management to act in the best interest of the owners (shareholders).n 1. The only way for management to maintain its position over the long run is to be sensitive to shareholder concerns.n 2. Stock option incentives.n 3. Institutional influence.5. Social Responsibility and Ethical Behavior.n A. Is the goal of shareholder wealth maximization consistent with social responsibility?n 1. In most cases the answer is “yes”. Maximizing shareholder wealth attracts capital and provides employment and other benefits to the community (national, state, local, etc.).5. Social Responsibility and Ethical Behavior.n 2. Some socially desirable actions may be less compatible with shareholder wealth maximization. For example, pollution controls, equitable hiring practices, and fair pricing standards may be in consistent with achieving maximum market value. Such actions may have to be mandatory.5. Social Responsibility and Ethical Behavior.n B. Unethical and/or illegal financial practices may lessen confidence in U.S. securities markets and made it more difficult for managers to maximize shareholder wealth. During the 1980s and 1990s, illegal insider trading activities made news headlines. Insider trading occurs when individuals seek to profit from trading using information that has not been made available to the public.6. The Role of Financial Markets.n A. Financial markets are the meeting places for people, corporations, and institutions that either need money or have money to lend or invest.n 1. National, state, and local governments seek funds in public financial markets.n 2. Corporations raise funds in corporate financial markets.6. The Role of Financial Markets.n B. Financial markets may be classified in several ways.n 1. Domestic. 2. International.n 3. Corporate. 4. Government.n 5. Money and capital.n a. Markets that focus on short-term securities that have a life of a year or less are called money markets.n b. Capital markets are defined as markets where securities have a life of more than one year. Capital markets are further classified as intermediate (1-10 years) and long-term (more than 10 years).6. The Role of Financial Markets.n C. Financial markets allocate capital to the highest bidder within a risk-return framework. Individuals possessing capital seek to earn the highest rate of return at a given level of risk. Prices of securities in the market reflect the collective judgment of all participants. Securities price movements provide feedback to corporate managers indicating the markets evaluation of their activities. Corporations raise capital by selling new securities in the primary market. Securities previously sold by corporations trade in the secondary market between investors.6. The Role of Financial Markets.n D. In addition to the pressure placed on corporate management through adjustment of securities prices, some investors seek to directly influence corporate boards of directors. Institutional investors have used their influence to bring about the restructuring of a number of firms. Restructuring may be manifested by a change in the capital structure of the firm, a merger or acquisition, selling off low-return divisions, reductions in the workforce, and even the removal of the existing management team.6. The Role of Financial Markets.n E. The internationalization of financial markets is necessary for the support of expanding international product markets. Modern corporate financial managers must understand international capital flows, electronic funds transfer, foreign currency hedging strategies, and many other global trading factors.6. The Role of Financial Markets.n F. The internet and changes in the capital markets: Technology has significantly impacted capital markets.n 1. Cost reduction for trading securities which has led to consolidations of markets and brokerage firms.n 2. Creation of new electronic markets.n 3. Internet trading provided by discount brokerage firms has forced full-service brokers to offer less profitable Internet trading to their clients.7. Format of the Text.n A. Introduction: An examination of the goals of financial management within an analytical framework.n B. Financial analysis and planning.n 1. Review of accounting relationships with finance.n 2. Ratio analysis.n 3. Construction of budgets and pro forma statements.n 4. Operating and financial leverage.7. Format of the Text.n C. Working capital management: Techniques for managing the levels of current assets and shot-term financing in a risk-return context.n D. Capital budgeting and related valuation concepts.n 1. Time value of money.n 2. Cost of capital.n 3. Capital budgeting techniques.7. Format of the Text.n E. Long-term financing: An analysis of the characteristics of the structure, participants, and instruments of the capital markets.n F. Corporate growth through mergers: An integration of financial management concepts within the framework of corporate growth strategy.n G. International financial management: An examination of the complex, risky environment of international finance.Conclusion n 1. The field of finance integrates concepts from economics, accounting, and a number of other areas.n 2. The relationship of risk to return is a central focus of finance.n 3. The primary goal of financial managers is to maximize the wealth of the shareholders.Conclusion n 4. Financial managers attempt to achieve wealth maximization through daily activities such as credit and inventory management and through longer-term decisions related to raising funds.Conclusion n 5. Financial managers must carefully consider domestic and international business conditions in carrying out their responsibilities.n 6. Daily price changes in the financial markets provide feedback about a companys performance and help investors allocate their capital between firms.Part 2 Financial Analysis and PlanningChapter 2 Review of AccountingSummary p An understanding of financial statements is a prerequisite for financial management decision making. In this chapter the characteristics of three basic financial statements income statement, balance sheet, and statement of cash flows are presented. The impact of income tax provisions on financial decisions is also examined.1. Income Statementsp A. The income statement.p 1. The income statement begins with the aggregate amount of sales (revenues) that are generated within a specific period of time.p 2. The various expenses that occur in generating the sales are subtracted in stair-step fashion to arrive at the net income for the defined period.1. Income Statementsp 3. The separation of the expense categories such as cost of goods sold, selling and administrative expenses, depreciation, interest and taxes enables the management to assess the relative importance and appropriateness of the expenditures in producing each level of sales.p 4. The “bottom line” value, net income, is the aggregate amount available to the owners.1. Income Statementsp 5. Net income is converted from an aggregate value to an earnings per share (EPS) value by dividing net income by the number of shares of outstanding stock.p 6. The EPS is a measurement of the return available to providers of equity capital to the firm. The return to the providers of debt capital, interest, appears earlier in the income statement as a tax-deductible expense.1. Income Statementsp 7. The earnings per share may be converted to a current value through application of the price/earnings (P/E) ratio.p 8. The P/E ratio is best used as a relative measure of value because the numerator, price, is based on the future and the denominator, earnings, is a current measure.p 9. The income statement reflects only income occurring to the individual or the business firm from verifiable transactions as opposed to the economists definition of income.2. Balance sheetp 1. Whereas the income statement provides a summary of financial transactions for a period of time, the balance sheet portrays the cumulative results of transactions at a point in time. The balance sheet may present the position of the firm as a result of transactions for 6 months, 25 years, or other periods.2. Balance sheetp 2. The balance sheet is divided into two broad categories. The assets employed in the operations of the firm compose one category while the other, liabilities and net worth, is composed of the sources of financing for the employed assets.p 3. Within the asset category, the assets are listed in their order of liquidity.p a. Cash (including demand deposits).p b. Marketable securities: Investments of temporarily excess cash in highly liquid securities.2. Balance sheetp c. Accounts receivable.p d. Inventory.p e. Prepaid expenses: Future expense items that have already been paid.p f. Investments: Investments in securities and other assets for longer than one operating cycle.p g. Plant and equipment adjusted for accumulated depreciation.2. Balance sheetp 4. The various sources of financing of a firm are listed in their order of maturity. Those sources that mature within the defined period, current liabilities, are listed first. The more permanent debt and equity sources follow.p a. Accounts payable.p b. Notes payable.p c. Accrued expenses: An obligation to pay is incurred but payment has not been made.p d. Long-term debt: All or a majority of the principal will be paid beyond the current period.2. Balance sheetp e. Preferred stock.p f. Common stock accounts:p (1) Common stock (par value).p (2) Capital paid in excess of par.p (3) Retained earnings.p 5. Confusing balance-sheet-related terms.p a. Retained earnings: All of the assets of a firm are listed on the asset side of the balance sheet, yet many individuals envision a pile of money when the term retained earnings is used.2. Balance sheetp Retained earnings is simply a cumulative total of the earnings of the firm since its beginning until the data of the balance sheet that have not been paid to the owners. Earnings that are retained are used to purchase assets, pay liabilities, throw a big party for the management, etc. Regardless, there is no money available from a “container” labeled retained earnings.2. Balance sheetp b. Net worth or book value of the firm is composed of the various common equity accounts and represents the net contributions of the owners to the business. Book value is a historical value and does not necessarily coincide with the market value of the owners equity.2. Balance sheetp 6. Limitations of the balance sheet: Values are recorded at cost; replacement cost of some assets, particularly plant and equipment, may greatly exceed the