business environment and concept financial management (bec)+

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1、Module41MODFinanUciLE alM34 anaTAgemeXnEtS:TRANSACTIONSINPROPERTYBusinessEnvironmentandConcepts主讲老师:Amy1Copyright高才国际教育集团M41FinancialManagementA. Financial Management B. Working Capital Management C. Capital Structure D. Mergers2 A.Financial Management3AFinancialManagement1. Five func

2、tionsa)FinancingfunctionØRaise capitalto supportfirm’soperations andinvestmentprogramsb)Capital budgetingfunctionØSelectthebestprojectstoinvestfirmresources,basedonriskand return c)FinancialmanagementfunctionØManage firm’sinternalcash flowsand itscapital structure to minimize WACCand 

3、ensure thefirm canpayitsobligationswhen due d)Corporate governance functionØDevelop ownershipand corporate governance systemin thebestof stockholdee)RiskmanagementfunctionØManage thefirm’sexposure to all typesof risk4 AFinancialManagement2. Ultimate Goalsa)Stockprice ØHighriskinvestme

4、ntsmayincrease NI butmakefirmmore riskyØMeasurementofprofitmaydeferprojectsbenefitsin thelongrunØEthical and socialresponsibilitiesb)Agency theoryØRelyonmarketforcesØEstablish independentinternalauditdepartmentØExecutive compensationplanc)Riskand return tradeoffØEconomicenvironments,p

5、roduction, investment,financing,and marketing d)Taxconsideration ØFinal returnsisaftertaxprofitsØInterestistaxdeductible whiledividendisnotØAlternative taxaccountingmethodsmayreducetaxable income5 B. Working Capital Management6BWorkingCapitalManagement1. Managing the Firm’s Cash Conve

6、rsion Cyclea)Cash conversioncycle Øinventoryconversion periodØreceivables collection period (days sales outstanding)Øpayables deferral period Receives materials Pays Finishes goods Collects from suppliers suppliers and sells themreceivables Cashconversioncycle7 BWorkingCapitalManageme

7、nt1. Managing the Firm’s Cash Conversion Cyclea)Cash conversioncycle Øinventoryconversion period①Average time toconvert materials into finished goods and sell those goodsExample:Assume thataverage inventoryis$10,000,000 and annual salesare$40,000,000 Answer:Average inventory $10,000,0

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