FIN 3120 Lecture Notes - Lecture 1: Multinational Corporation, Cash Flow, General Partnership
Document Summary
1. 1 identify the goal of the firm. 1. 2 understand the basic principles of finance, their importance, and the importance of ethics and trust. 1. 3 describe the role of finance in business. 1. 4 distinguish among the different legal forms of business organization. 1. 5 explain what has led to the era of the multinational corporation. To maximize shareholder wealth by maximizing the price of existing stock price. Accounting profits are not equal to cash flows. Cash flow, not profits are what drives the value of a business. Where cash would go if the project is selected versus what it would be if not selected. Money is worth more now than later. Opportunity cost -- cost of the alternatives missed whenever a decision is made. Need to compare future values back to the present value of the money or opportunity or whatever it is. Investors will not take on additional risk unless compensated.
