公司理财精要Chap00

CORPORATE

FINANCEWANG

DONG,

LecturerInternational

Business

FacultyEmail:

33272081@About

me王东

Mischa-Sun

Yat-Sen

University,BSc

in

Finance(中山大学岭南学金融本科)-Univeristy

of

Quneesland

(Australia),MSc

in

Applied

Finance(澳大昆士兰大学金融硕士)-City

Univeristy

of

Macau,DBA

Candidate澳门城市大学工商管理博士在读-Courses

taught:Financial

accounting财务会计Financial

reports财务报告Macroeconomics宏观经济学*21-3Course

DescriptionThis

class

is

to

convey

the

most

importantconcepts

and

principles

of

corporate

finance

atan

undergraduate

level

and

retain

the

threebasic

themes

as

the

central

focus1-4Focus

1

An

emphasis

on

intuition-explain

the

principlesat

work

on

a

common

sense,

intuitive

levelbefore

launching

into

specifics.

Underlyingideas

are

discussed

first

in

general

terms,

thenfollowed

by

specific

examples

that

illustrate

imore

concrete

terms

how

a

financial

managermight

proceed

in

a

given

situation1-5Focus

2

A

unified

valuation

approach-Net

Present

Valueis

treated

as

the

basic

concept

underlyingcorporate

finance.

Every

subject

covered

isfirmly

rooted

in

valuation,

and

care

is

taken

toexplain

how

decisions

have

valuation

effects.1-6Focus

3

A

managerial

focus-

Students

learn

thatfinancial

management

concerns

management.The

role

of

financial

manager

as

decisionmaker

is

emphasized

and

they

stress

the

needfor

managerial

input

and

judgment.1-7Required

ReadingsTextbook:

Essentials

of

Corporate

Finance，SixthEdition，Stephen

A.

Ross，Randolph

W.

Westerfield，Bradford

D.

Jordan,

McGraw

–

HillRecommended

Readings:Financial

news

from

websites

like

following:///home.htm1-8Grading•GradePoints••AssignmentFinal

exam50%50%•Total100%1-9Calculators Students

are

required

to

have

one

financialcalculator.

The

model

“Texas

Instruments

BAII

Plus”

is

strongly

recommended.

For

moreinformation,

please

visit

the

following

website

/educationportal/site

productDetail/us_baii_plus.html1-10

Special

Features

of

the

Course:

Thecomputer

skill

of

MS

Excel

is

essential

to

theclass.

The

technique

of

using

MS

Excel

andfinancial

calculator

will

be

demonstrated

in

thclass.1-11Class

Discussion

and

Reading

SchedulePart

one.

Overview

of

Financial

ManagementCh.

1

Introduction

to

Financial

ManagementPart

two.

Understanding

Financial

Statements

and

Cash

FlowCh.

2

Financial

Statements,

Taxes,

and

Cash

FlowCh.

3

Working

with

Financial

StatementsPart

three.

Valuation

of

Future

Cash

FlowsCh.

4

Introduction

to

Valuation:

The

Time

Value

of

MoneyCh.

5

Discounted

Cash

Flow

ValuationPart

four.

Valuing

Stocks

and

BondsCh.

6

Interest

Rates

and

Bond

ValuationCh.

7

Equity

Markets

and

Stock

ValuationPart

five.

Capital

BudgetingCh.

8

Net

Present

Value

and

Other

Investment

CriteriaCh.

9

Making

Capital

Investment

DecisionsPart

six.

Risk

and

ReturnCh.

10

Risk

and

ReturnPart

seven.

Long-Term

FinancingCh.

11

Cost

of

CapitalCh.

12

Leverage

and

Capital

Structure1-12Copyright

©

2011

by

the

Mc

Graw-

Hill

Companies,

Inc.

All

rights

reseMc

Graw-

Hill/

IrwinChapter

Outline1.11.2Finance:

A

Quick

LookBusiness

Finance

and

The

FinancialManagerForms

of

Business

OrganizationThe

Goal

of

Financial

ManagementThe

Agency

Problem

and

Control

ofthe

CorporationFinancial

Markets

and

the

Corporation1.31.41.51.6RWJ

website1-131-14Key

Concepts

and

SkillsHave

a

good

understanding

of:

The

basic

types

of

financial

managementdecisions

and

the

role

of

the

financial

managerThe

goal

of

financial

management

The

financial

implications

of

the

different

foof

business

organization

The

conflicts

of

interest

that

can

arise

betweowners

and

managers1-15Basic

Areas

Of

FinanceCorporate

finance

=

Business

FinanceInvestmentsFinancial

institutionsInternational

financeReturn

toQuick

QuizInvestments

Work

with

financial

assets

such

as

stocksand

bonds

Value

of

financial

assets,

risk

versus

return,and

asset

allocationJob

opportunitiesStockbroker

or

financial

advisorPortfolio

managerSecurity

analyst1-16Financial

Institutions Companies

that

specialize

in

financialmatters

Banks

–

commercial

and

investment,

credit

unions,savings

and

loansInsurance

companiesBrokerage

firmsJob

opportunities1-171-18International

Finance

An

area

of

specialization

within

each

of

theareas

discussed

so

far

May

allow

you

to

work

in

other

countries

or

atleast

travel

on

a

regular

basis

Need

to

be

familiar

with

exchange

rates

andpolitical

risk

Need

to

understand

the

customs

of

other

countries;

speaking

a

foreign

language

fluently

is

also

helpfulBasic

Areas

Of

Finance1-191-20Why

Study

Finance?MarketingBudgets,

marketing

research,

marketing

financial

productsAccounting

Dual

accounting

and

finance

function,

preparation

of

financialstatementsManagementStrategic

thinking,

job

performance,

profitabilityPersonal

finance

Budgeting,

retirement

planning,

college

planning,

day-to-day

cashflow

issues1-21Business

Finance

Some

important

questions

that

are

answeredusing

financeWhat

long-term

investments

should

the

firm

takeon?Where

will

we

get

the

long-term

financing

to

payfor

the

investments?How

will

we

manage

the

everyday

financialactivities

of

the

firm?1-22Financial

Manager

Financial

managers

try

to

answer

some,

or

all,

ofthese

questions

The

top

financial

manager

within

a

firm

is

usually

theChief

Financial

Officer

(CFO)Treasurer

–

oversees

cash

management,

creditmanagement,

capital

expenditures,

and

financial

planningController

–

oversees

taxes,

cost

accounting,

financialaccounting,

and

data

processingCorporate

Organization

ChartFigure

1.11-23Financial

Management

DecisionsCapital

budgetingWhat

long-term

investments

or

projects

should

thebusiness

take

on?Capital

structureHow

should

we

pay

for

our

assets?Should

we

use

debt

or

equity?Working

capital

managementHow

do

we

manage

the

day-to-day

finances

of

thefirm?Return

toQuick

Quiz1-24Forms

of

Business

OrganizationThree

major

forms

in

the

United

StatesSole

proprietorshipPartnership–

General–

LimitedCorporation–

Limited

liability

companyReturn

toQuick

Quiz1-25Sole

ProprietorshipAdvantagesEasiest

to

startLeast

regulatedSingle

owner

keeps

all

ofthe

profitsTaxed

once

as

personalincomeDisadvantagesLimited

to

life

of

ownerEquity

capital

limited

toowner’s

personal

wealthUnlimited

liabilityDifficult

to

sell

ownershipinterestBusiness

owned

by

one

person1-26PartnershipAdvantagesTwo

or

more

ownersMore

capital

availableRelatively

easy

to

startIncome

taxed

once

aspersonal

incomeDisadvantagesUnlimited

liabilityGeneral

partnershipLimited

partnershipPartnership

dissolveswhen

one

partner

dies

orwishes

to

sellDifficult

to

transferownershipBusiness

owned

by

two

or

more

persons1-271-28CorporationAdvantagesLimited

liabilityUnlimited

lifeSeparation

of

ownershipand

managementTransfer

of

ownership

iseasyEasier

to

raise

capitalDisadvantages–

Separation

of

ownership

andmanagement

(agency

problem)–

Double

taxation

(incometaxed

at

the

corporate

rateand

then

dividends

taxed

atpersonal

rate,

whiledividends

paid

are

not

taxdeductible)A

legal

“person”

distinct

from

owners

and

a

residentof

astate1-29International

Corporate

FormsJoint

stock

companiesPublic

limited

companiesLimited

liability

companiesAll

share:Public

ownershipLimited

liability1-30Goal

Of

Financial

ManagementWhat

should

be

the

goal

of

a

corporation?Maximize

profit?Minimize

costs?Maximize

market

share?Maximize

the

current

value

per

share

of

thecompany’s

existing

stockMaximize

the

market

value

of

the

existingowners’

equityReturn

toQuick

Quiz1-31Goal

Of

Financial

Management

Does

this

mean

we

should

do

anything

andeverything

to

maximize

owner

wealth?Outsourcing?Off-shoring?Enron?Corporate

support

of

charities?1-32Sarbanes-Oxley

Act(SarBox,

2002)Driven

by

corporate

scandalsEnron,

Tyco,

WorldCom,

Adelphia

Intended

to

strengthen

protection

againstaccounting

fraud

and

financial

malpracticeCompliance

very

costlyFirms

driven

to:Go

public

outside

the

U.S.Go

private

(“go

dark”)1-33The

Agency

ProblemAgency

relationshipPrincipal

hires

an

agent

to

represent

its

interestStockholders

(principals)

hire

managers

(agents)to

run

the

companyAgency

problemConflict

of

interest

between

principal

and

agentManagement

goals

and

agency

costsReturn

toQuick

Quiz1-34Do

Managers

Act

in

the

Shareholders’Interests?Managerial

compensationIncentives

can

be

used

to

align

management

andstockholder

interestsIncentives

need

to

be

carefully

structured

toinsure

that

they

achieve

their

goalCorporate

controlThreat

of

a

takeover