Summary Fundamentals Of Corporate Finance

A snapshot of the summary - Fundamentals of Corporate Finance Author: David Hillier Iain Clacher Bradford D Jordan Randolph Westerfield Stephen A Ross ISBN: 9780077178239

• 1 Introduction to corporate finance

• 1.1 Corporate Finance and the Financial Manager

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• Broadly speaking corporate finance is the answers to the following 3 questions:

  1. What long term investment should you make?
  2. Where will you get the long-term financial pay for your investment?
  3. How will you manage your everyday finance activities?
• What is the difference between finance and accounting functions in a firm?

  Finance: highlights the finance activities in a large firm
  Accounting: takes all the financial info and data that arises as a result of ongoing business activities and presents this in a way that allows management to assess  the performance and risk of their firm (financial accounting) and makes informed decisions on future corporate activity (management accounting)
• How is the organization called that sets rules where all  all European firms in the stock exchange must comply to?

  International Accounting Standards (IAS)
• What is the meaning of decision capital budgeting means?

  The process of planning and managing a firm's long-term investments. And evaluating size, timing and risk future cash flows is the essence of capital budgeting.
• What is the meaning of decisions capital structure (or financial structure)?

  The mixture of long-term debt and equity maintained by a firm
• What is the meaning of Long-term debt?

  The long-term borrowing by the firm (longer than 1 year) to finance its long-term investments.

• 1.2 The goal of Financial Management

• Name 7 possible goals for financial managments that are important to an objective basis for making and evaluating financial desicions?

  1. survive 
  2.  Avoid financial distress and bankruptcy
  3.  Beat the competition
  4. Maximize sales or market share
  5. Minimize costs
  6. Maximize profits
  7. Maintain steady earnings growth
• What is the main goal of financial managment?

   to make money or add value for the owners.

• 1.3 Financial Markets and the Cooperation

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• What is the Primary advantage of financial marketes?

  The primary advantage of financial markets is that they facilitate the flow of money from those that have surplus cash to those that need financing.
• Explain the Cash flows to and from the firm:

  The financial markets are not funded just by corporations paying cash to creditors or shareholders