Ch1Introduction(公司理财(哈工大深圳研究生院王苏生).pptVIP

HIT SGS Corporation Finance Chapter 1 Introduction 王苏生 哈尔滨工业大学深圳研究生院 The Finance Function The Finance Function Interaction between Financing Investment Decisions The Finance Function By making investing and financing decisions, the financial manager is attempting to achieve the following objective: The objective of the financial manager and the corporation is to MAXIMIZE THE CURRENT VALUE OF SHAREHOLDERS WEALTH. (Taken literally, this means that a firm should pursue policies that maximize its todays quotation in the Wall Street Journal) VALUE VERSUS PROFITS This may seem to you at first like a strange objective. Specifically, you may wonder if maximizing shareholders current wealth encourages for example pumping up current profit by skimping on the quality of the product? The answer is not necessarily, because current profits and current shareholderswealth are very different. Figuring the implications of trading off current and future profits on the current value of a project is one of the key tasks in finance In fact, Current value consists of profits that will be coming in (1) at different points in the future; and (2) with different degrees of uncertainty and risk Accounting for the time and risk dimensions is critical in making investment decisions WHAT IS FINANCE? Thus, we can say that Finance is the study of the effects of time and uncertainty on value. THE ROLE OF THE FINANCIAL OFFICER The financial manager in a modern firm has three main duties 1. Meet cash needs: For example, a firm may need to meet a payroll today, but is receiving a cash inflow next month. The financial officer will need to borrow short term 2. Manage excess cash: If, on the other hand, the payroll payments are next month and the cash inflow is today, then it is her job to earn a return on the excess cash These are problems in short-term financial management 3. Raise capital for projects: A firm desiring to undertake an investment may need additional funds. The