Tài chính doanh nghiệp - Chapter 1: Introduction to financial management

Introduction to Financial ManagementChapter 10Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerKey Concepts and SkillsKnow the basic types of financial management decisions and the role of the financial managerKnow the goal of financial managementKnow the financial implications of the different forms of business organisationUnderstand the conflicts of interest that can arise between owners and managers1Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerChapter OutlineFinance: A Quick LookBusiness Finance and the Financial ManagerForms of Business OrganisationThe Goal of Financial ManagementThe Agency Problem and Control of the CorporationFinancial Markets and the Corporation2Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerBasic Areas Of FinanceCorporate financeInvestmentsFinancial institutionsInternational finance3Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerInvestmentsWork with financial assets such as shares and bondsValue of financial assets, risk versus return and asset allocationJob opportunitiesStockbroker Financial advisorPortfolio managerSecurity analyst4Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerFinancial InstitutionsCompanies that specialise in financial mattersBanks – commercial and investment, credit unionsInsurance companiesBrokerage firmsJob opportunities5Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerInternational FinanceThis is an area of specialisation among all of the areas discussed so farIt may allow you to work in other countries or at least travel on a regular basisNeed to be familiar with exchange rates and political riskNeed to understand the customs of other countries and speaking a foreign language fluently is also helpful6Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerWhy Study Finance?MarketingBudgets, marketing research, marketing financial productsAccountingDual accounting and finance function, preparation of financial statementsManagementStrategic thinking, job performance and profitabilityPersonal financeBudgeting, retirement planning, university planning, day-to-day cash flow issues7Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerBusiness FinanceSome important questions that are answered using financeWhat long-term investments should the firm take on?Where will we get the long-term financing to pay for the investment?How will we manage the everyday financial activities of the firm?8Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerFinancial ManagerFinancial managers try to answer some or all of these questionsThe top financial manager within a firm is usually the Chief Financial Officer (CFO)Treasurer – oversees cash management, credit management, capital expenditure and financial planningAccountant – oversees taxes, cost accounting, financial accounting and data processing9Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerFinancial Management DecisionsCapital budgetingWhat long-term investments or projects should the business 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 the firm?10Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerForms of OrganisationThree major forms in Australia and New ZealandSole proprietorshipPartnershipGeneralLimitedCompanyLimited liability companyPublicly listedPrivate company11Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerSole ProprietorshipAdvantagesEasiest to startLeast regulatedSingle owner keeps all the profitsTaxed once as personal incomeDisadvantagesLimited to life of ownerEquity capital limited to owner’s personal wealthUnlimited liabilityDifficult to sell ownership interest12Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerPartnershipAdvantagesTwo or more ownersMore capital availableRelatively easy to startIncome taxed once as personal incomeDisadvantagesUnlimited liabilityGeneral partnershipLimited partnershipPartnership dissolves when one partner dies or wishes to sellDifficult to transfer ownership13Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerCompanyAdvantagesLimited liabilityUnlimited lifeSeparation of ownership and managementTransfer of ownership is easyEasier to raise capitalDisadvantagesSeparation of ownership and managementTaxation of company profits can be an issue14Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerGoal of Financial ManagementWhat should be the goal of a corporation?Maximise profit?Minimise costs?Maximise market share?Maximise the current value of the company’s shares?Does this mean we should do anything and everything to maximise owner wealth?15Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerThe Agency ProblemAgency relationshipPrincipal hires an agent to represent their interestShareholders (principals) hire managers (agents) to run the companyAgency problemConflict of interest between principal and agentManagement goals and agency costs16Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerManaging ManagersManagerial compensationIncentives can be used to align management and shareholder interestsThe incentives need to be structured carefully to make sure that they achieve their goalCorporate controlThe threat of a takeover may result in better managementOther stakeholders17Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerFigure 1.218Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerFinancial MarketsCash flows to the firmPrimary vs. secondary marketsDealer vs. auction marketsListed vs. private companiesAustralian Securities Exchange (ASX)19Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan TraylerQuick QuizWhat are the four basic areas of finance?What are the three types of financial management decisions and what questions are they designed to answer?What are the three major forms of business organisation?What is the goal of financial management?What are agency problems and why do they exist within a corporation?20Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Essentials of Corporate Finance by Ross, Trayler, Bird, Westerfield & JordanSlides prepared by Rowan Trayler