BUSM030 Corporate Finance For
Managers
, 1- Investment Decision
Calculating NPV
-
Goals of Management
Corporate Finance Financial
Questions addressed: survive, avoid
bankruptcy
·
.
Long-term investments chosen
by firm ·
Maximise Sales/market share
·
Minimise costs / Maximise
profits
2. How to raise funds on selected investments ·
Maximise shareholder wealth
Maximise
↳ current share
price
3. How to
managed finance short-term assets
Structure of Business
Corporate Organisation
Sole
Proprietorships Unlimited liability
3
·
·
Personal tax on
profit
Partnerships
·
General
·
Limited
Corporations
·
Limited liabilities companies
Personal tax dividends
corporate tax
profits
·
+ on
on
,Difference Between
Primary Market &
Secondary Market
Primary Secondary
/
" " ""
" " "" " " " "" " " " "" " " "
" "" "" " "" " "
•
" "" "
" " "
•
"
"
of
↳
Corporation & Gov is the seller ↳
Transferring ownership corporate securities
↳ Equity & debt
•
Can be traded in dealer / auction market
OTC , NASDAQ ,
Bond NYSE
( No location ) ( location)
Physical
ownership vs
Management E.
g. Enron Energy Company
Difference in Information Different Objectives
Stock prices & returns stockholders
managers vs
• •
Issues of shares & other securities
Top management vs
operating Management
• •
•
Dividends •
Stockholders vs Banks & lenders
Financing
•
, Managers & Shareholder Interests
of
Goals
Corporation
Maximising shareholder 's wealth
•
Agency problems
•
Conflict of interest between management & Owners
and than the
Manager prefers his ow n wealth
wellbeing company 's
•
solutions to Agency Problems ( To align management & Stockholder interests )
1
Compensation package
.
2.
Salary
3. Stock
options ( Financial incentives )
4. Takeovers ( Threat of takeover may result in better management )
•
High takeover rate means the
corporate management is good ?
5.
Specialised monitoring
financial
E.
g. Auditor
May not sign if the
report is unreliable
• -
Managers
, 1- Investment Decision
Calculating NPV
-
Goals of Management
Corporate Finance Financial
Questions addressed: survive, avoid
bankruptcy
·
.
Long-term investments chosen
by firm ·
Maximise Sales/market share
·
Minimise costs / Maximise
profits
2. How to raise funds on selected investments ·
Maximise shareholder wealth
Maximise
↳ current share
price
3. How to
managed finance short-term assets
Structure of Business
Corporate Organisation
Sole
Proprietorships Unlimited liability
3
·
·
Personal tax on
profit
Partnerships
·
General
·
Limited
Corporations
·
Limited liabilities companies
Personal tax dividends
corporate tax
profits
·
+ on
on
,Difference Between
Primary Market &
Secondary Market
Primary Secondary
/
" " ""
" " "" " " " "" " " " "" " " "
" "" "" " "" " "
•
" "" "
" " "
•
"
"
of
↳
Corporation & Gov is the seller ↳
Transferring ownership corporate securities
↳ Equity & debt
•
Can be traded in dealer / auction market
OTC , NASDAQ ,
Bond NYSE
( No location ) ( location)
Physical
ownership vs
Management E.
g. Enron Energy Company
Difference in Information Different Objectives
Stock prices & returns stockholders
managers vs
• •
Issues of shares & other securities
Top management vs
operating Management
• •
•
Dividends •
Stockholders vs Banks & lenders
Financing
•
, Managers & Shareholder Interests
of
Goals
Corporation
Maximising shareholder 's wealth
•
Agency problems
•
Conflict of interest between management & Owners
and than the
Manager prefers his ow n wealth
wellbeing company 's
•
solutions to Agency Problems ( To align management & Stockholder interests )
1
Compensation package
.
2.
Salary
3. Stock
options ( Financial incentives )
4. Takeovers ( Threat of takeover may result in better management )
•
High takeover rate means the
corporate management is good ?
5.
Specialised monitoring
financial
E.
g. Auditor
May not sign if the
report is unreliable
• -
