CORPFIN 2500 Study Guide - Final Guide: Payback Period, Income Statement, Tax Rate
24 Jul 2018
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Introduction to business (corporate) finance: goals of business finance, how a business acquires funds for investments? (topics 2-5, how to invest the funds acquired and finance operations? (topics 6-11, three areas of decision: The objectives of financial management: potential goals of a firm, survival, avoid financial distress and bankruptcy, beat the competition, maximize sales or market share, minimise costs, maximise profits, maintain steady earnings growth. Relationships in finance and agency costs: agency costs arise between managers and shareholders (or when one entity is empowered to undertake actions on behalf of another). Incentives for managers to maximise position of shareholders (dividends, share price, growth) however there are threats: getting sacked, company takeovers, role of auditors, remuneration package (2) shareholders vs creditors, problem of asset substitution. If this occurred, financing and investment decisions can be made by different individuals and hence firms to maximise production opportunities (due to increased funds: nb: perfect capital markets do not imply certainty.
