财务管理基础.ppt

FoundationsofFinancialManagement,2,Part1Introduction,Chapter1TheGoalsAndFunctionsofFinancialManagement,3,Summary,Thischaptertracestheevolutionandinterrelationshipsoffinanceasafieldofstudyandtheroleofthefinancialmanagerinadynamiceconomy.,4,LearningObjectives,1.Thefieldoffinanceintegratesconceptsfromeconomics,accounting,andanumberofotherareas.2.Therelationshipofrisktoreturnisacentralfocusoffinance.3.Theprimarygoaloffinancialmanagersistomaximizethewealthoftheshareholders.,5,LearningObjectives,4.Financialmanagersattempttoachievewealthmaximizationthroughdailyactivitiessuchascreditandinventorymanagementandthroughlonger-termdecisionsrelatedtoraisingfunds.,6,LearningObjectives,5.Financialmanagersmustcarefullyconsiderdomesticandinternationalbusinessconditionsincarryingouttheirresponsibilities.6.Dailypricechangesinthefinancialmarketsprovidefeedbackaboutacompanysperformanceandhelpinvestorsallocatetheircapitalbetweenfirms.,7,1.ThefieldofFinance.,A.Thefieldoffinanceiscloselyrelatedtoeconomicsandaccounting.1.Economicsprovidesastructurefordecision-makinginsuchareasas:a.Riskanalysis.b.Pricetheory.c.Comparativereturnanalysis.,8,1.ThefieldofFinance.,2.Economicsprovidesthebroadpictureoftheeconomicenvironmentincludingthe:a.InstitutionalstructureoftheFederalReserveSystem.b.Commercialbankingsystem.c.Interrelationshipsbetweenvariouseconomicsectors.,9,1.ThefieldofFinance.,3.Accounting,sometimessaidtobethelanguageoffinance,providesfinancialdatathroughincomestatements,balancesheets,andthestatementofcashflows.4.Financelinkseconomictheorywithaccountingdata.Allcorporatemanagersmustbefamiliarwithsuchdatainordertoassessthefinancialperformanceofthefirm.,10,1.ThefieldofFinance.,B.Thedemandforfinancialmanagementskillsexistsinmanysectorsofaglobalsocietyincludingcorporatemanagement,financialinstitutions,andconsulting.,11,2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.,A.Financeachievedrecognitionasaseparatefieldofstudyinresponsetothecreationofgiantcorporationsattheturnofthecentury.B.TheworstdepressioninUnitedStateshistorycausedashiftinemphasisfromrapidmergergrowthtopreservationofcapital,liquidity,reorganization,andthebankruptcyprocess.,12,2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.,C.Themostsignificantstepintheevolutionofcontemporaryfinancialmanagementbeganinthemid-1950s.Emphasiswasplacedontheanalyticallydeterminedemploymentofresourceswithinthefirm.Thedecision-makingnatureoffinancialmanagementwasmanifestedintheenthusiasmforthestudyof:,13,2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.,1.Allocationoffinancialcapitalforthepurchaseofrealcapital(plantandequipment).2.Efficientutilizationofcurrentassets.3.Capitalstructuretheory.4.Dividendpolicy.,14,2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.,D.Theanalyticalorientationoffinancialmanagementfocusedonrisk-returnrelationshipsandthedesiretomaximizereturnatagivenlevelofrisk.E.Therapidinflationexperiencedintheeconomyinthe1970sandearly1980sfollowedbyalengthyperiodofdisinflationhasimpactedallareasoffinancialdecision-making.,15,2.Financeasafieldofstudyhasevolvedovertimeinresponsetochangingbusinessmanagementneeds.,F.Thetechnologicalchangesinthe1990srapidlyimpactedthefinancialmanagementfunctionsofbusinessfirms.E-commerceacceleratedcashflowsandsignificantlyaffectedthemanagementofinventoryandaccountsreceivable.Financialmanagersmustremainsensitivetotheimpactsofe-commerceandtheinternetonfinancefunctionsinthe21stcentury.,16,3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.,A.Dailyfinancialmanagementactivities.1.Creditmanagement.2.Inventorycontrol.3.Receiptanddisbursementoffunds.B.Less-routineactivities.1.Saleofstocksandbonds.2.Capitalbudgeting.3.Dividenddecisions.,17,3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.,C.Formsoforganization:Thefinancefunctionmaybecarriedoutwithinanumberofdifferentformsoforganizations:1.Soleproprietorship.a.Singleownership.b.Simplicityofdecisionmaking.c.Loworganizationalandoperatingcosts.d.Unlimitedliability.e.Earningsoftheproprietorshiparetaxedaspersonalearningsoftheindividualowner.,18,3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.,2.Partnership.a.Twoormorepartners.b.Usuallyformedbyarticlesofpartnershipagreement.c.Unlimitedliabilityforallpartnersunlessalimitedpartnershipisformedwhichprovideslimitedliabilityforoneormorepartners.Atleastonepartnermustbeageneralpartner.d.Earningsaretaxedaspersonalearningsofpartners.,19,3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.,3.Corporation.a.Mostimportantformofbusinessintermsofrevenueandprofits.b.Legalentity.c.Formedbyarticlesofincorporation.d.Stockholders(owners)havelimitedliability.e.Easydivisibilityofownership.,20,3.FunctionsofFinancialManagement:Afinancialmanagerisresponsibleforfinancinganefficientlevelandcompositionofassetsbyobtainingfinancingthroughthemostappropriatemeans.,3.Corporation.f.Managedbytheboardofdirectors.g.Doubletaxationofearnings:Earningsofthecorporationaresubjecttothecorporateincometax;dividends(distributednetincome)aresubjecttopersonaltaxation.SmallsubchapterScorporations,however,avoidthedoubletaxationdisadvantage.,21,4.GoalsofFinancialManagement.,A.Arethegoalsofthethreebasicformsofbusinessorganizationsthesame?Doesthemanagementofacorporationmakethesamedecisionthatasoleproprietorwouldmake?B.Agencytheory,amajorareaoffinancialresearch,focusesontherelationshipbetweentheownersofafirmandthemanagersofthefirm.,22,4.GoalsofFinancialManagement.,C.Becauseoftheirlargepercentageofownership,mutualfundsandpensionfundscaninfluencethedecisionsofmajorU.S.companies.D.Alternativegoals.1.Profitmaximization(ormaximizingearningspershare)hasseveraldrawbacks.a.Doesnotcaptureriskeffects.b.Failstoconsiderthetimingofthebenefits.c.Variationsindefinitionsofprofitcausemeasurementproblems.d.Inflationandinternationalcurrencytransactionscomplicatetheissue.,23,4.GoalsofFinancialManagement.,2.Maximizationofownerswealthorshareholderwealthmaximizationifthefirmisacorporationisthegoalofthefirm.Valuationisthekeyconceptofthisgoal.Thevaluationprocesscapturesthetimingoftheexpectedcashflowsandtheriskassociatedwiththecashflows.,24,4.GoalsofFinancialManagement.,E.Incentivesformanagementtoactinthebestinterestoftheowners(shareholders).1.Theonlywayformanagementtomaintainitspositionoverthelongrunistobesensitivetoshareholderconcerns.2.Stockoptionincentives.3.Institutionalinfluence.,25,5.SocialResponsibilityandEthicalBehavior.,A.Isthegoalofshareholderwealthmaximizationconsistentwithsocialresponsibility?1.Inmostcasestheansweris“yes”.Maximizingshareholderwealthattractscapitalandprovidesemploymentandotherbenefitstothecommunity(national,state,local,etc.).,26,5.SocialResponsibilityandEthicalBehavior.,2.Somesociallydesirableactionsmaybelesscompatiblewithshareholderwealthmaximization.Forexample,pollutioncontrols,equitablehiringpractices,andfairpricingstandardsmaybeinconsistentwithachievingmaximummarketvalue.Suchactionsmayhavetobemandatory.,27,5.SocialResponsibilityandEthicalBehavior.,B.Unethicaland/orillegalfinancialpracticesmaylessenconfidenceinU.S.securitiesmarketsandmadeitmoredifficultformanagerstomaximizeshareholderwealth.Duringthe1980sand1990s,illegalinsidertradingactivitiesmadenewsheadlines.Insidertradingoccurswhenindividualsseektoprofitfromtradingusinginformationthathasnotbeenmadeavailabletothepublic.,28,6.TheRoleofFinancialMarkets.,A.Financialmarketsarethemeetingplacesforpeople,corporations,andinstitutionsthateitherneedmoneyorhavemoneytolendorinvest.1.National,state,andlocalgovernmentsseekfundsinpublicfinancialmarkets.2.Corporationsraisefundsincorporatefinancialmarkets.,29,6.TheRoleofFinancialMarkets.,B.Financialmarketsmaybeclassifiedinseveralways.1.Domestic.2.International.3.Corporate.4.Government.5.Moneyandcapital.a.Marketsthatfocusonshort-termsecuritiesthathavealifeofayearorlessarecalledmoneymarkets.b.Capitalmarketsaredefinedasmarketswheresecuritieshavealifeofmorethanoneyear.Capitalmarketsarefurtherclassifiedasintermediate(1-10years)andlong-term(morethan10years).,30,6.TheRoleofFinancialMarkets.,C.Financialmarketsallocatecapitaltothehighestbidderwithinarisk-returnframework.Individualspossessingcapitalseektoearnthehighestrateofreturnatagivenlevelofrisk.Pricesofsecuritiesinthemarketreflectthecollectivejudgmentofallparticipants.Securitiespricemovementsprovidefeedbacktocorporatemanagersindicatingthemarketsevaluationoftheiractivities.Corporationsraisecapitalbysellingnewsecuritiesintheprimarymarket.Securitiespreviouslysoldbycorporationstradeinthesecondarymarketbetweeninvestors.,31,6.TheRoleofFinancialMarkets.,D.Inadditiontothepressureplacedoncorporatemanagementthroughadjustmentofsecuritiesprices,someinvestorsseektodirectlyinfluencecorporateboardsofdirectors.Institutionalinvestorshaveusedtheirinfluencetobringabouttherestructuringofanumberoffirms.Restructuringmaybemanifestedbyachangeinthecapitalstructureofthefirm,amergeroracquisition,sellingofflow-returndivisions,reductionsintheworkforce,andeventheremovaloftheexistingmanagementteam.,32,6.TheRoleofFinancialMarkets.,E.Theinternationalizationoffinancialmarketsisnecessaryforthesupportofexpandinginternationalproductmarkets.Moderncorporatefinancialmanagersmustunderstandinternationalcapitalflows,electronicfundstransfer,foreigncurrencyhedgingstrategies,andmanyotherglobaltradingfactors.,33,6.TheRoleofFinancialMarkets.,F.Theinternetandchangesinthecapitalmarkets:Technologyhassignificantlyimpactedcapitalmarkets.1.Costreductionfortradingsecuritieswhichhasledtoconsolidationsofmarketsandbrokeragefirms.2.Creationofnewelectronicmarkets.3.Internettradingprovidedbydiscountbrokeragefirmshasforcedfull-servicebrokerstoofferlessprofitableInternettradingtotheirclients.,34,7.FormatoftheText.,A.Introduction:Anexaminationofthegoalsoffinancialmanagementwithinananalyticalframework.B.Financialanalysisandplanning.1.Reviewofaccountingrelationshipswithfinance.2.Ratioanalysis.3.Constructionofbudgetsandproformastatements.4.Operatingandfinancialleverage.,35,7.FormatoftheText.,C.Workingcapitalmanagement:Techniquesformanagingthelevelsofcurrentassetsandshot-