The Role and Environment of Managerial Finance
CHAPTER 1
THE ROLE AND ENVIRONMENT OF MANAGERIAL FINANCE
Learning Goals
1. Define finance, the major areas of finance, and the career opportunities available in this field, and the legal forms of business organization. 2. Describe the managerial finance function and its relationship to economics and accounting. 3. Identify the primary activities of the financial manager within the firm. 4. Explain why wealth maximization, rather than profit maximization, is the firm’s goal and how the agency issue is related to it. 5. Understand the relationship between financial institutions and markets, as well as the role and operations of the money and capital markets. 6. Discuss the fundamentals of business taxation of ordinary income and capital gains, and explain the treatment of tax losses. 7. _____________________________________________________________________
1. What is Finance?
- Finance can be defined as the art and science of managing money. - Levels of study:
a) Macro Level:
At the macro level, finance is the study of financial institutions and financial markets and how they operate within the financial system in both the local and global economies.
b) Micro Level:
At the micro level, finance is the study of financial planning, asset management, and fund raising for businesses and financial institutions.
- Financial Management (in the micro sense) can be described as follows:
[pic]
2. Major Areas in Finance and opportunities in Finance
- A well-developed financial system is a hallmark and essential characteristic of any modern developed nation.
- Financial markets, financial intermediaries, and financial management are the important components.
- Financial markets and financial intermediaries facilitate the flow of
THE ROLE AND ENVIRONMENT OF MANAGERIAL FINANCE
Learning Goals
1. Define finance, the major areas of finance, and the career opportunities available in this field, and the legal forms of business organization. 2. Describe the managerial finance function and its relationship to economics and accounting. 3. Identify the primary activities of the financial manager within the firm. 4. Explain why wealth maximization, rather than profit maximization, is the firm’s goal and how the agency issue is related to it. 5. Understand the relationship between financial institutions and markets, as well as the role and operations of the money and capital markets. 6. Discuss the fundamentals of business taxation of ordinary income and capital gains, and explain the treatment of tax losses. 7. _____________________________________________________________________
1. What is Finance?
- Finance can be defined as the art and science of managing money. - Levels of study:
a) Macro Level:
At the macro level, finance is the study of financial institutions and financial markets and how they operate within the financial system in both the local and global economies.
b) Micro Level:
At the micro level, finance is the study of financial planning, asset management, and fund raising for businesses and financial institutions.
- Financial Management (in the micro sense) can be described as follows:
[pic]
2. Major Areas in Finance and opportunities in Finance
- A well-developed financial system is a hallmark and essential characteristic of any modern developed nation.
- Financial markets, financial intermediaries, and financial management are the important components.
- Financial markets and financial intermediaries facilitate the flow of