BEC-22306
Summary Corporate Financial Management
1
,Lecture 1: Chapter 1, 2, 3
What is corporate finance? (CH1)
• Goal: maximising the shareholder value → making a company a cash generating
activity! via investments!
o Investment and finance is applicable here!
o other goals:
▪ survive,
▪ avoid financial distress
▪ beat competition
▪ maximize sales or maker share
▪ minimize costs
▪ maximize profits
▪ maintain steady earnings growth
o The triple bottom line as goal: profit, social, environmental objective
nowadays!
▪ manager best serves shareholders interest by making decision that are
valued by shareholders who in turn reflect the broader societal and
environmental concerns of the general population! → assuming that
the shareholders have the same objectives and concerns as the
general population!
2
,Financial markets:
• Profit and loss account (income statement): only states the costs and returns
associated to your business
• Balance sheet: represents the values of the assets and the liabilities of the firm!
o in this case the investments cost would not be recorded on the profit and loss
account because it is not a cost but an investment! → only the depreciation
can be seen as a ‘costs’ and therefore are displayed here!
• Financial market consists of:
o Capital Market → Primary market OR Secondary market
o Money Market → Short-term debt
3
, o Capital markets:
▪ Concerns the primary market and the secondary market:
- Primary market: when a corporation issues securities (stocks or
bonds), cash flows from investors to the firm.
- Secondary market: involves the exchange of already issues
securities between investors (focus point)
o Securities may be exchange traded or traded over – the-
counter in a dealer market.
o involves one owner or creditor selling to another!
o this market provides means for transferring ownership of
corporate securities!
o Shares that are traded on an organized exchange are said to be
listed on that exchange or publicly listed.
o In order to be eligible for exchange a firm needs to have e.g. a
certain asset size, number of shareholders. Moreover, the firm
needs to have at least three years of financial account filed
with regulator.
4
Summary Corporate Financial Management
1
,Lecture 1: Chapter 1, 2, 3
What is corporate finance? (CH1)
• Goal: maximising the shareholder value → making a company a cash generating
activity! via investments!
o Investment and finance is applicable here!
o other goals:
▪ survive,
▪ avoid financial distress
▪ beat competition
▪ maximize sales or maker share
▪ minimize costs
▪ maximize profits
▪ maintain steady earnings growth
o The triple bottom line as goal: profit, social, environmental objective
nowadays!
▪ manager best serves shareholders interest by making decision that are
valued by shareholders who in turn reflect the broader societal and
environmental concerns of the general population! → assuming that
the shareholders have the same objectives and concerns as the
general population!
2
,Financial markets:
• Profit and loss account (income statement): only states the costs and returns
associated to your business
• Balance sheet: represents the values of the assets and the liabilities of the firm!
o in this case the investments cost would not be recorded on the profit and loss
account because it is not a cost but an investment! → only the depreciation
can be seen as a ‘costs’ and therefore are displayed here!
• Financial market consists of:
o Capital Market → Primary market OR Secondary market
o Money Market → Short-term debt
3
, o Capital markets:
▪ Concerns the primary market and the secondary market:
- Primary market: when a corporation issues securities (stocks or
bonds), cash flows from investors to the firm.
- Secondary market: involves the exchange of already issues
securities between investors (focus point)
o Securities may be exchange traded or traded over – the-
counter in a dealer market.
o involves one owner or creditor selling to another!
o this market provides means for transferring ownership of
corporate securities!
o Shares that are traded on an organized exchange are said to be
listed on that exchange or publicly listed.
o In order to be eligible for exchange a firm needs to have e.g. a
certain asset size, number of shareholders. Moreover, the firm
needs to have at least three years of financial account filed
with regulator.
4
