Intro to Corporate Finance Chap. 1 - 2238 Words

†¢Chapter 1 INTRODUCTION TO CORPORATE FINANCE GOAL Today, corporate finance managers must make decision in a much more coordinated manner and generally has direct responsibilities for a control process. Because there are financial implications in virtually all segments of business, she/he must have sufficient knowledge of finance to work these implications into the area. At the end of this chapter, you should be able to: †¢ Undenstand the nature of corporate finance . †¢ Understand financial management framework. †¢ Identify the basic corporate finance goals. †¢ objectives and functions of corporate finance. Finance is the science of management of money†¦show more content†¦This leads to the basic differentiation between wealth maximization and profit maximization approach. There are several arguments of why getting as much profit as possible will not ensure the firms viability in the long-term. In contrast to wealth maximization, the profit maximization holds on to the following views in term of: 1. Time Horizons. It focuses on short-term benefits and tries to gain as much profit as possible regardless of the long-term effects. 2. Timing of Returns. It does not consider the timing of returns and thus time value of money. 3. Distributions of Income. It tends to ignore the owners wish to receive a portion of earnings in the form of dividends. 4. Risk. It gives less consideration to risk in an attempt to maximize profits, as higher risks will associate with higher return. Other goals of the firm are essential to be stated to avoid any misunderstanding. In order to achieve wealth maximization, the following goals are essentials: 1. Maximization of profits. To make profits is essential to provide stability and growth in operations and rewards to individuals and institutions that contribute to the firm. It is essential, however to consider the above constraints and the risk of making a decision that is higher risk relates to higher return. 2. Maximization ofShow MoreRelatedLibrary Management204752 Words   |  820 PagesRobert D. Library and information center management / Robert D. Stueart and Barbara B. Moran. — 7th ed. p. cm. — (Library and information science text series) Includes bibliographical references and index. ISBN 978–1–59158–408–7 (alk. paper) ISBN 978–1–59158–406–3 (pbk. : alk. paper) 1. Library administration—United States. 2. Information services— United States—Management. I. Moran, Barbara B. II. Title. Z678.S799 2007 025.1—dc22 2007007922 British Library Cataloguing in Publication Data is available