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SOLUTION MANUAL FOR Corporate Finance 13th Edition by Stephen A.
Ross, Randolph W. Westerfield, Jeffrey Jaffe & Bradford D. Jordan
Chapter 1
INTRODUCTION TO CORPORATE FINANCE
SLIDES
1.1 Chapter 1: Introduction to Corporate Finance
1.2 Key Concepts and Skills
1.3 Chapter Outline
1.4 1.1 What Is Corporate Finance?
1.5 The Balance Sheet Model of the Firm
1.6 The Capital Budgeting Decision
1.7 The Capital Structure Decision
1.8 Short-Term Asset Management
1.9 The Financial Manager
1.10 Hypothetical Organization Chart
1.11 1.2 The Corporate Firm
1.12 Forms of Business Organization
1.13 A Comparison of Corporations and Partnerships
1.14 1.3 The Importance of Cash Flow
1.15 1.4 The Goal of Financial Management
1.16 1.5 The Agency Problem and Control of the Corporation
1.17 Management Goals
1.18 Managing Managers
1.19 1.6 Regulation
1.20 Quick Quiz
1.21 End of Main Content
1.22 Accessibility Content: Text Alternatives for Images
1.23 Short-Term Asset Management Text Alternative
1.24 Hypothetical Organization Chart Text Alternative
1.25 1.3 The Importance of Cash Flows Text Alternative
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CHAPTER WEB SITES
Section Web Address
1.1 CFO: www.cfo.com
1.2 ―Launch your Business‖: www.sba.gov
1.4 Business Ethics magazine: www.business-ethics.com
1.6 Sarbanes-Oxley survey: www.protiviti.com/US-
en/insights/sox-compliance-survey
CHAPTER ORGANIZATION
1.1 What Is Corporate Finance?
The Balance Sheet Model of the Firm
1-1
,@PROFDOCDIGITALLIBRARIES
The Financial Manager
1.2 The Corporate Firm
The Sole Proprietorship
The Partnership
The Corporation
A Corporation by Another Name…
1.3 The Importance of Cash Flows
Identification of Cash Flows
Timing of Cash Flows
Risk of Cash Flows
1.4 The Goal of Financial Management
Possible Goals
The Goal of the Financial Manager
A More General Goal
1.5 The Agency Problem and Control of the Corporation
Agency Relationships
Management Goals
Do Managers Act in the Stockholders‘ Interests?
Stakeholders
1.6 Regulation
The Securities Act of 1933 and the Securities Exchange Act of 1934
Sarbanes-Oxley
ANNOTATED CHAPTER OUTLINE
Slide 1.1 Chapter 1: Introduction to Corporate Finance
Slide 1.2 Key Concepts and Skills
Slide 1.3 Chapter Outline
PowerPoint Note: If there is a slide that you do not wish to include in your
presentation, choose to hide the slide under the “Slide Show” menu, instead of
deleting it. If you decide that you would like to use that slide at a later date, you
can just unhide it.
PowerPoint Note: Be sure to check out the notes that accompany some of the
slides on the “Notes Pages” within PowerPoint.
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1.1. What is Corporate Finance?
Slide 1.4 1.1 What Is Corporate Finance?
Corporate finance addresses several important questions:
1. In what long-term assets should the firm invest? (Capital
budgeting)
2. How should the firm raise funds for required capital expenditures?
(Capital structure)
3. How should short-term operating cash flows be managed? (Net
working capital)
A. The Balance Sheet Model of the Firm
Slide 1.5 The Balance Sheet Model of the Firm
The Balance Sheet presents a picture of the firm at a point in time,
and it provides a model by which to address the three basic
questions that corporate finance managers must answer.
Slide 1.6 The Capital Budgeting Decision
1. Long-term investment decisions determine the level of
fixed assets.
Slide 1.7 The Capital Structure Decision
2. Financing policy determines the liabilities and equity side
of the balance sheet.
Slide 1.8 Short-Term Asset Management
3. Short-term asset management choices (e.g., conservative
versus aggressive) affect the level of net working capital.
B. The Financial Manager
Slide 1.9 The Financial Manager
SOLUTION MANUAL FOR Corporate Finance 13th Edition by Stephen A.
Ross, Randolph W. Westerfield, Jeffrey Jaffe & Bradford D. Jordan
Chapter 1
INTRODUCTION TO CORPORATE FINANCE
SLIDES
1.1 Chapter 1: Introduction to Corporate Finance
1.2 Key Concepts and Skills
1.3 Chapter Outline
1.4 1.1 What Is Corporate Finance?
1.5 The Balance Sheet Model of the Firm
1.6 The Capital Budgeting Decision
1.7 The Capital Structure Decision
1.8 Short-Term Asset Management
1.9 The Financial Manager
1.10 Hypothetical Organization Chart
1.11 1.2 The Corporate Firm
1.12 Forms of Business Organization
1.13 A Comparison of Corporations and Partnerships
1.14 1.3 The Importance of Cash Flow
1.15 1.4 The Goal of Financial Management
1.16 1.5 The Agency Problem and Control of the Corporation
1.17 Management Goals
1.18 Managing Managers
1.19 1.6 Regulation
1.20 Quick Quiz
1.21 End of Main Content
1.22 Accessibility Content: Text Alternatives for Images
1.23 Short-Term Asset Management Text Alternative
1.24 Hypothetical Organization Chart Text Alternative
1.25 1.3 The Importance of Cash Flows Text Alternative
,@PROFDOCDIGITALLIBRARIES
CHAPTER WEB SITES
Section Web Address
1.1 CFO: www.cfo.com
1.2 ―Launch your Business‖: www.sba.gov
1.4 Business Ethics magazine: www.business-ethics.com
1.6 Sarbanes-Oxley survey: www.protiviti.com/US-
en/insights/sox-compliance-survey
CHAPTER ORGANIZATION
1.1 What Is Corporate Finance?
The Balance Sheet Model of the Firm
1-1
,@PROFDOCDIGITALLIBRARIES
The Financial Manager
1.2 The Corporate Firm
The Sole Proprietorship
The Partnership
The Corporation
A Corporation by Another Name…
1.3 The Importance of Cash Flows
Identification of Cash Flows
Timing of Cash Flows
Risk of Cash Flows
1.4 The Goal of Financial Management
Possible Goals
The Goal of the Financial Manager
A More General Goal
1.5 The Agency Problem and Control of the Corporation
Agency Relationships
Management Goals
Do Managers Act in the Stockholders‘ Interests?
Stakeholders
1.6 Regulation
The Securities Act of 1933 and the Securities Exchange Act of 1934
Sarbanes-Oxley
ANNOTATED CHAPTER OUTLINE
Slide 1.1 Chapter 1: Introduction to Corporate Finance
Slide 1.2 Key Concepts and Skills
Slide 1.3 Chapter Outline
PowerPoint Note: If there is a slide that you do not wish to include in your
presentation, choose to hide the slide under the “Slide Show” menu, instead of
deleting it. If you decide that you would like to use that slide at a later date, you
can just unhide it.
PowerPoint Note: Be sure to check out the notes that accompany some of the
slides on the “Notes Pages” within PowerPoint.
,@PROFDOCDIGITALLIBRARIES
1.1. What is Corporate Finance?
Slide 1.4 1.1 What Is Corporate Finance?
Corporate finance addresses several important questions:
1. In what long-term assets should the firm invest? (Capital
budgeting)
2. How should the firm raise funds for required capital expenditures?
(Capital structure)
3. How should short-term operating cash flows be managed? (Net
working capital)
A. The Balance Sheet Model of the Firm
Slide 1.5 The Balance Sheet Model of the Firm
The Balance Sheet presents a picture of the firm at a point in time,
and it provides a model by which to address the three basic
questions that corporate finance managers must answer.
Slide 1.6 The Capital Budgeting Decision
1. Long-term investment decisions determine the level of
fixed assets.
Slide 1.7 The Capital Structure Decision
2. Financing policy determines the liabilities and equity side
of the balance sheet.
Slide 1.8 Short-Term Asset Management
3. Short-term asset management choices (e.g., conservative
versus aggressive) affect the level of net working capital.
B. The Financial Manager
Slide 1.9 The Financial Manager
