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ADMS 3530 (82)
Ron Ophir (1)
Lecture

Finance.docx

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Department
Administrative Studies
Course
ADMS 3530
Professor
Ron Ophir
Semester
Fall

Description
Finance- a body of concepts, theories, and models which deal with the raising and allocation of funds by individuals, governments, and business Government- public finance Business- corporate finance Individuals- personal finance Dollar is worth more tomorrow and dollar of money tomorrow is less today. Capital budgeting- in what fixed, tangible, real assets should a firm invest in? Ans- real Real assets are used to produce goods and service How much should a firm spend/ what is the optimal capital budget? Ans- optimal capital budget Capital structure- how much debt a firm should use? Ans- equity/debt- these 2 are external Dividend policy- how to we split earning/profits between dividends and reinvestment for growth Ans- reinvestment for growth- internal financing Working capital management- how much cash should a firm carry?- excess cash- securities- liquid and converted into cash quickly with a little loss of value Accounts receivable, A/P, inventory- how much to carry? Long term- longer than a year and short term- less than yr 1. Capital budgeting- LONG TERM 2. Capital structure- LONG TERM- long term financing 3. Dividend policy- stock prices reflect the current and future prospect of the firm- LONG TERM 4. Working capital management- SHORT TERM 1 month T bill pays a small return – 0.14% Stocks with no dividends may result in capital appreciation/growth Cost of capital- discount rate- required rate of return Midterm- first 5 weeks of lecture and final is cumulative LECTURE 1 Role of finance can vary- from small to really big- treasurer, president Large companies- Google, RIM- can be more complicated Shares of a company- you are the owners of the company and you should have say on how the company is run, liability is limited. Owners are business are taxed separately. Double taxation – company makes profit- business profit is taxed at corporate tax rate and whatever remains can be paid as dividends or reinvestment. Dividends on the shareholders are taxed at personal tax rate- you can have the dividends in RRSP- tax free Registered retirement saving pla
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