FINA 2700 Study Guide - Final Guide: Current Liability, Private Equity Fund, Clean Price
Document Summary
Starts with the identification of investment opportunities called capital investment projects. It is the decision of which real assets the firm should acquire. Financial managers identify promising projects and decide how much to invest in each (also called capital budgeting); tangible or intangible. Goal of capital investments = generate future returns. Most important is the timing of returns, not their amount. Managers must also raise the money needed for the investment financing decision (how to raise money) Choosing which option to take is called the capital structure decision. Short-term financing decisions: how to raise cash to meet a short-term need. Short-term investment decisions: how to invest spare cash for brief periods. Financing and investment decisions are interconnected the amount of investment determines the amount of financing. Financial assets: securities sold by companies representing a claim on real assets. Securities: stock/financial assets that can be purchased and traded by investors.
