Chapter 1, the financial manager and the firm. After studying this chapter you will be able to: Identify the key financial decisions facing the financial manager of any business, identify common forms of business organization in the United States and their respective strengths and weaknesses, describe the typical organization of the financial function in a large corporation, | Fundamentals of Corporate Finance, 3/e Robert Parrino, . David S. Kidwell, . Thomas W. Bates, . 1 Copyright© 2015 John Wiley & Sons, Inc. Chapter 1: The Financial Manager and the Firm NEED UPDATED PHOTO Copyright© 2015 John Wiley & Sons, Inc. 2 Learning Objectives Identify the key financial decisions facing the financial manager of any business Identify common forms of business organization in the United States and their respective strengths and weaknesses Describe the typical organization of the financial function in a large corporation Copyright© 2015 John Wiley & Sons, Inc. 3 Learning Objectives Explain why maximizing the value of the firm’s stock is the appropriate goal for management Discuss how agency conflicts affect the goal of maximizing stockholder value Explain why ethics is an appropriate topic in the study of corporate finance Copyright© 2015 John Wiley & Sons, Inc. 4 The Role of the Financial Manager Maximize Shareholder Wealth Maximizing the price of a firm’s stock will maximize the value of a firm and the wealth of its shareholders/owners Stakeholders Managers, employees, suppliers, creditors, and the government The Role of the Financial Manager It’s All About Cash Flows Positive residual cash flow may be paid to firm owners as dividends or invested in the firm The larger the positive residual cash flow, the greater the value of a firm Negative residual cash flow, over the long run, leads to bankruptcy or closing a business Copyright© 2015 John Wiley & Sons, Inc. 7 Copyright© 2015 John Wiley & Sons, Inc. 7 The Role of the Financial Manager Three Fundamental Decisions in Financial Management Capital Budgeting: decide which long-term assets to acquire to maximize net benefits for the firm Financing: decide how to pay for short-term and long-term assets by finding the best combination of short-term debt, long-term debt, and equity Working Capital: decide how to manage short-term resources and obligations by adjusting current assets and . | Fundamentals of Corporate Finance, 3/e Robert Parrino, . David S. Kidwell, . Thomas W. Bates, . 1 Copyright© 2015 John Wiley & Sons, Inc. Chapter 1: The Financial Manager and the Firm NEED UPDATED PHOTO Copyright© 2015 John Wiley & Sons, Inc. 2 Learning Objectives Identify the key financial decisions facing the financial manager of any business Identify common forms of business organization in the United States and their respective strengths and weaknesses Describe the typical organization of the financial function in a large corporation Copyright© 2015 John Wiley & Sons, Inc. 3 Learning Objectives Explain why maximizing the value of the firm’s stock is the appropriate goal for management Discuss how agency conflicts affect the goal of maximizing stockholder value Explain why ethics is an appropriate topic in the study of corporate finance Copyright© 2015 John Wiley & Sons, Inc. 4 The Role of the Financial Manager Maximize Shareholder Wealth Maximizing the price of a .
