Introduction to Financial Management

1
Introduction to
Financial
Management
M: Finance 4th Edition
Cornett, Adair, and Nofsinger
© 2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the
prior written consent of McGraw-Hill Education.

,What is Finance?
Finance applies specific value to
• Things owned.
• Services used.
• Decisions made.
Financial management
• Organization’s approach to valuation.




© 2019 McGraw-Hill Education. 1-2

,Economic Participants
Two dimensions
• Participants with “extra” investment money.
• Participants with economically viable ideas.
Blank No Extra Money Extra Money
No Economically Viable Type 1: No money and Type 2: Money but
Business Ideas no ideas no ideas
Economically Viable Type 3: No money but Type 4: Both money
Business Ideas ideas and ideas




© 2019 McGraw-Hill Education. 1-3

, Economic Participants–Type 1
Type 1 participants
• Do not lend or spend in business context.
• No direct role in financial markets.
• Indirect role: to provide labor and consume products.




© 2019 McGraw-Hill Education. 1-4