Introduction to Managerial Finance
Part
1
Introduction
to
Managerial Finance
Chapter 1
The Role and Environment of Managerial Finance
Chapter 2
Financial Statements and Analysis
Chapter 3
Cash Flow and Financial Planning
Chapter
1
The Role and Environment of Managerial
Finance
LEARNING GOALS
LG1
LG2
LG3
LG4
LG5
LG6
2
Define finance, the major areas of finance and the opportunities available in this field, and the legal forms of business organization.
Describe the managerial finance function and its relationship to economics and accounting.
Identify the primary activities of the financial manager within the firm.
Explain why wealth maximization, rather than profit maximization, is the firm’s goal and how the agency issue is related to it.
Understand the relationship between financial institutions and markets, and the role and operations of the money and capital markets.
Discuss the fundamentals of business taxation of ordinary income and capital gains.
Across the Disciplines
Why This Chapter Matters To You
Accounting: You need to understand the relationships between the firm’s accounting and finance functions; how the financial statements you prepare will be used for making investment and financing decisions; ethical behavior by those responsible for a firm’s funds; what agency costs are and why the firm must bear them; and how to calculate the tax effects of proposed transactions.
Information systems: You need to understand the organization of the firm; why finance personnel require both historical and projected data to support investment and financing decisions; and what data are necessary for determining the firm’s tax liability.
Management: You need to understand the legal forms of business organization; the tasks that will be performed by finance personnel; the goal of the firm; the issue of management compensation; the role of ethics in the firm; the agency problem; and the firm’s relationship to
1
Introduction
to
Managerial Finance
Chapter 1
The Role and Environment of Managerial Finance
Chapter 2
Financial Statements and Analysis
Chapter 3
Cash Flow and Financial Planning
Chapter
1
The Role and Environment of Managerial
Finance
LEARNING GOALS
LG1
LG2
LG3
LG4
LG5
LG6
2
Define finance, the major areas of finance and the opportunities available in this field, and the legal forms of business organization.
Describe the managerial finance function and its relationship to economics and accounting.
Identify the primary activities of the financial manager within the firm.
Explain why wealth maximization, rather than profit maximization, is the firm’s goal and how the agency issue is related to it.
Understand the relationship between financial institutions and markets, and the role and operations of the money and capital markets.
Discuss the fundamentals of business taxation of ordinary income and capital gains.
Across the Disciplines
Why This Chapter Matters To You
Accounting: You need to understand the relationships between the firm’s accounting and finance functions; how the financial statements you prepare will be used for making investment and financing decisions; ethical behavior by those responsible for a firm’s funds; what agency costs are and why the firm must bear them; and how to calculate the tax effects of proposed transactions.
Information systems: You need to understand the organization of the firm; why finance personnel require both historical and projected data to support investment and financing decisions; and what data are necessary for determining the firm’s tax liability.
Management: You need to understand the legal forms of business organization; the tasks that will be performed by finance personnel; the goal of the firm; the issue of management compensation; the role of ethics in the firm; the agency problem; and the firm’s relationship to