Business Finance Notes- MAN2089
Textbook
Core Textbook- Hillier, Fundamentals of Corporate Finance (3rd European Edition).
Lecturer
Anup Basnet
62MS02
Lecture Room
Lecture Theatre G
Assessments-
Assessment 1- Week 7. Mid-term Test. 50 Minutes. MCQ. Based on Material from Weeks 1-
5. Weighting = 30%. Open Book. 25 Questions. 15 Numerical Questions. 10 Non-Numerical
Questions.
Assessment 2- Week 12. Exam. 2 Hours. Based on Material from Weeks 1-11. Weighting =
70%. Open Book. Three Compulsory Questions. Potentially In Person or Online Exam- Tbc.
Week 1-
What is Corporate Finance?
• Capital Budgeting:
o Non-Current Assets.
• Capital Structuring:
o Non- Current Liabilities.
o Shareholders’ Equity.
• Working Capital Management:
o Current Assets.
o Current Liabilities.
Capital Budgeting
• Used for new projects.
• What kind of projects do you want to invest into?
Capital Structure
• Source of Finance.
o Debt.
o Long-term Liabilities.
o Equity.
Working Capital Management
, • How to manage the cash.
• How to manage inventory.
• How to treat Account receivables.
• How to treat Account payables.
• Short-term cash shortage how would you manage those?
• How to manage working capital.
• Day to Day activities.
CFO Goal- For a Public Company: wants to maximise shareholder wealth. Same for a private
company- as it is increasing your wealth.
The Three Pillars of Corporate Finance
• Corporate Finance:
o Investment.
▪ Capital Budgeting,
o Financing.
▪ Capital Structure.
▪ Source of Financing
o Liquidity.
▪ Working Capital Management.
▪ Managing Day-to-Day activities.
The Three Pillars of Corporate Finance
Investment
What do you need to spend money on when rubbing a business?
• Inventory.
• Machinery.
• Land.
• Labour.
Capital Budgeting: is the process of planning and managing a firm’s long-term investments.
Finance
The two main types of finance are:
• Equity:
o Shares.
• Debt Finance:
o Bank Borrowings.
o Bonds.
Capital Structure: Is the mixture of long-term debt and equity maintained by a firm.
Liquidity
,Cash/ Liquidity is needed to keep the business running. Companies that grow rapidly are in
danger of running out of cash (‘overtrading’).
Working Capital Management: is a day-by-day activity which ensures that three firm has
sufficient resources to continue its operations and avoid costly interruptions.
Goals of Financial Management
The ultimate financial goal is value creation- that is, maximise the value of the business.
Q. What does maximising value mean for a company?
A. For a company, maximising value means maximising shareholder wealth.
Summary
Corporate Finance
Investment Financing Liquidity
Value Creation
Goals of Financial Management
Other possible goals of financial management:
• Survive.
• Increase Market Share.
• Be the Best.
• Avoid Financial Distress/ Bankruptcy.
• Maximise Sales.
• Earnings Growth.
• Invest in Employees.
• Protect the Environment.
• Minimise Carbon Footprint.
, Typical Company Reporting Structure- Financial Management Roles Highlighted
Case Study- Jessica Uhl
Jessica Uhl became Shell’s Chief Financial Officer (CF) in March 2017.
Responsibilities Include:
• Business and Corporate Finance.
• Planning and Appraisal.
• Internal Audit.
• Tax.
• Business Integrity.
How Sources of Finance Vary by Type of Organisation
Different Types of Organisations
Different Legal Forms (Excluding Not-for-Profit):
• Sole Trader
Textbook
Core Textbook- Hillier, Fundamentals of Corporate Finance (3rd European Edition).
Lecturer
Anup Basnet
62MS02
Lecture Room
Lecture Theatre G
Assessments-
Assessment 1- Week 7. Mid-term Test. 50 Minutes. MCQ. Based on Material from Weeks 1-
5. Weighting = 30%. Open Book. 25 Questions. 15 Numerical Questions. 10 Non-Numerical
Questions.
Assessment 2- Week 12. Exam. 2 Hours. Based on Material from Weeks 1-11. Weighting =
70%. Open Book. Three Compulsory Questions. Potentially In Person or Online Exam- Tbc.
Week 1-
What is Corporate Finance?
• Capital Budgeting:
o Non-Current Assets.
• Capital Structuring:
o Non- Current Liabilities.
o Shareholders’ Equity.
• Working Capital Management:
o Current Assets.
o Current Liabilities.
Capital Budgeting
• Used for new projects.
• What kind of projects do you want to invest into?
Capital Structure
• Source of Finance.
o Debt.
o Long-term Liabilities.
o Equity.
Working Capital Management
, • How to manage the cash.
• How to manage inventory.
• How to treat Account receivables.
• How to treat Account payables.
• Short-term cash shortage how would you manage those?
• How to manage working capital.
• Day to Day activities.
CFO Goal- For a Public Company: wants to maximise shareholder wealth. Same for a private
company- as it is increasing your wealth.
The Three Pillars of Corporate Finance
• Corporate Finance:
o Investment.
▪ Capital Budgeting,
o Financing.
▪ Capital Structure.
▪ Source of Financing
o Liquidity.
▪ Working Capital Management.
▪ Managing Day-to-Day activities.
The Three Pillars of Corporate Finance
Investment
What do you need to spend money on when rubbing a business?
• Inventory.
• Machinery.
• Land.
• Labour.
Capital Budgeting: is the process of planning and managing a firm’s long-term investments.
Finance
The two main types of finance are:
• Equity:
o Shares.
• Debt Finance:
o Bank Borrowings.
o Bonds.
Capital Structure: Is the mixture of long-term debt and equity maintained by a firm.
Liquidity
,Cash/ Liquidity is needed to keep the business running. Companies that grow rapidly are in
danger of running out of cash (‘overtrading’).
Working Capital Management: is a day-by-day activity which ensures that three firm has
sufficient resources to continue its operations and avoid costly interruptions.
Goals of Financial Management
The ultimate financial goal is value creation- that is, maximise the value of the business.
Q. What does maximising value mean for a company?
A. For a company, maximising value means maximising shareholder wealth.
Summary
Corporate Finance
Investment Financing Liquidity
Value Creation
Goals of Financial Management
Other possible goals of financial management:
• Survive.
• Increase Market Share.
• Be the Best.
• Avoid Financial Distress/ Bankruptcy.
• Maximise Sales.
• Earnings Growth.
• Invest in Employees.
• Protect the Environment.
• Minimise Carbon Footprint.
, Typical Company Reporting Structure- Financial Management Roles Highlighted
Case Study- Jessica Uhl
Jessica Uhl became Shell’s Chief Financial Officer (CF) in March 2017.
Responsibilities Include:
• Business and Corporate Finance.
• Planning and Appraisal.
• Internal Audit.
• Tax.
• Business Integrity.
How Sources of Finance Vary by Type of Organisation
Different Types of Organisations
Different Legal Forms (Excluding Not-for-Profit):
• Sole Trader
