and managerial finance that is because
our county thriller kinda slowly moving to are intermediates
courses and we're gonna have to know some financial keywords and equations to
kinda values not that then liability so I thought we'd starts
when corporate finance and we begin now so that
by the time you reach intermediate finance you would know already
quite a lot about corporate finance so
to begin when you think the word financial what people think
about personal finance you think about it your own bank maybe city banker
bankamerica
and can't of course it like TDC ABCDE mojo RBC National Bank
and you have many different investments you have kinda savings accounts
you have checking accounts are
of course there are there those high-interest savings accounts they're
really
arent I and rats billion now be really don't yield a lot
Nick you have a higher risk tolerance you might be interested
and bonds or shares other company
but of course this is all personal finance and doesn't have anything to do
with corporate finance so we won't be talking
about this but we'll see some similarities
with corporations where they'll make I investments
or will look at I corporations that war
in Knox financing back in kinda be related
you maybe a personal a personal individual making you kind of decisions
but
remain herds worry wall we will not be talking to
personal finance a look at this and bring up some good things
that are concerning to you a corporation so one thing is
that they want to always remain liquid and bats
they are always able to pee their short term liabilities or at your 27
I cash bill I guess you can say
an opposite liabilities because the other maintain our liquidity and take
care
a short term obligations
we got buried down and of course
solvency another huge issue gonna make sure
better assets are always greater than our liability is reached here we have
asked
better lower than our liabilities which means we have negative ness
net assets and that we are insolvent because
we are getting to a point we might worry made have to declare bankruptcy
because they're out there solo and we have so many
liabilities and net assets just means that we have negative
equity because net assets is equity if you remember
you remember assets minus liabilities
that would be cool net assets and if you remember the equation
acids or the accounting equation at mind by both
were equal equity so
we have a negative part on this site it will be I'm negative on the side which
would be negative equity
so we always want to remain solvents and have
assets that are greater that our liability is a me wanna have
residual om net assets
the next thing is profitability we want her income in earnings
for a corporation to remain high what are the main
the most important thing a financial management it's you have
earnings per share maximized and you create
great shareholder value and actually make sure that our our stock
is rising I so that our
our shareholders are happy and that are company is performing
while so profitability is another main
a topic with Dan corporate finance
and some other decisions but corporate finance we're gonna be looking at
I view the mean one the course there are other
other decisions will have to see but neither user really the important ones
which were going to be going over
the first is investments so maybe if we're like
a construction company we might have to decide between a team
a capital the capital purchase for maybe like a condominium
so this is something we can do you with their money we can
purchase a condo in the best and that maybe we can get some Brendan sales
revenue maybe we'll just sold the condo
someone else so that they can creates revenues from its
so that's one type into investments we can best
an capital equipments were placed some old capital equipments or more
productive
an efficient or if we're not
maybe we're not a construction company maybe we're work a technological company
or scientific company and you really want to invest in R&D costs because
those technological company's R&D costs are huge if you remember
between RAM an apple
you're a member is doing well right now world's definitely Apple cuz
where Emma their soccer think as when strong
I think 150 140 dollars down to you right now I think it's trading at seven
dollars today
and that's because they fell behind I you know
in a innovative wise because
B warrants basically keeping up with the best in
most I but the technology that consumers want an apple was
so room told the client's if their cells are doing well of course their shirt
race will not do you wall either so
up all done really really well recently in the last few years
and this is why investment decisions regarding corporate for
corporate finance or so major
the next thing if we invest in something we have to decide
if we don't have enough money you actually cover costs what's a
invest in a capital project for R&D costs we're gonna have to get
the money to invest somehow
and this can either be done 30 equity financing which is giving up
some ownership in our company
and letting them how a share be residual assets
and crop it after your dividends
or region have dead financier worried you not
give up ownership
but we do you have to make fixed
he mans you damn her interest because if we have a one bedroom Arbonne
that means will get about north in cash but we have to return that one thousand
dollars
in like a year or so and we'll also have 85 percent
interest which is fifty dollars
annually you can see the interest will really add up
reissue I thousand the bonds which we call millions adored
cash for those investments so we can go with debts
we can go with equity doesn't let you touch the financing and also there is
hybrid instruments like
like preferred shares
and IR convertible bonds
is many different hybrid instruments and we're not gonna gordy's
I too much and the near future but
use mainly worry bird equity and debt financing because
there is there really two major hurts the where we're gonna
be deciding how did he raise money for our projects and investments
and of course bureaucrats the word bonds you can't think about its earnings may
be too big for this guy
and he will always remind your so let's go
to the third topic a corporate finance which is really major not is
the management of working capital working capital is current assets and
current liabilities which I
said over here and it has to do with collecting
receivables which are there's accounts receivable some money
coming into office collecting cash really converting his refusal that
Ashish
to paint suppliers which is
us giving her cash away
to you essentially suppliers for inventory or
or other purchases that we've made because if you don't pay cash on time
in trust what humiliates up for us not paying on time
and there's many other on working capital
assets and liabilities as well alight like inventory
and I'm managing prepaid expenses and so on so
it's not just what can I cash receivables an
Accounts Payable there are other current out current liabilities and of course
we always need to worry about it how much cash to keep on hand because we
don't wanna and up
in a cash crunch a cash crunch is not great at all
that means we have kinda run out of money for shorter obligations and we
might have to quickly run to the bank
you get a loan so that's will be able to cover
our shirts or arm are short term obligations
and be able to pay om
are our suppliers or creditors
and I might give us a higher interest rate which leads to you
greater interest costs so you always wonder how
cash on hand forward the NEX short term foreseeable future
and bile acid say goodbye nancial management
i'm ok worst is important to a company but also
the business model product how you treat your customers those are all
very important to business but
company ever have done well where
corporate finance and I'm man gene
decisions like investment and financing and capital
are working capital our company's I better absolutely huge like
but I should say everyone know that Apple Apple is
the most valuable company in the world it had the value out for a
billion dollars market cap is essentially
market capitalization which means the value I'll
all other bees current shares at a value
up the firm at the moment so it's worth $595 billion of course market cap you
can get
by what's I'm a number of shares
by the stock price so if you take number shares are at their most by a bride
price
you will see that it nicole's bad so
Apple one very good on example
up financial management another course
Exxon Mobil which is an oil company used to be the biggest
in the world for market capitalization big bowl a high now
all recently because Apple is growing exponentially to the sky
not sure while eventually
might fall we'll see what happens there are what a different side debate formats
by Exxon Mobil another huge company for under $20 billion
I'm course again that market capitalization you can get by transplant
shares
by the craze so those are two absolutely
huge companies and we're going to be looking at all
on investment decisions in financing and working capital and many other
I decisions for corporate finance over all these aricles so a lot of things were
going to be covering
and the near future although many articles you'll see
are things like capital budgeting
what to do with cash in cash flows
me cash cash management will be looking at
essentially the time value %uh money
you might have heard a boat that in recent lectures may be in school
present value in and future value rem our receivables in different assets
I will also be looking at I
capital investment decisions
looking at net present value I R pay-back period
may not know these terms yet but you will I assure you
I'll also be lookin at those things like return members
we risk
because the course more return is usually associated with more risk less
return easy
associated with less risk also be looking at things like bond valuation so
there's many
many different topics will be covering and you'll just have to read those
articles to see all
the different things that I'm talking about here something and it because I
think we're kind of going over
are are budgeted time easy try to keep it under 10 minutes
so make sure to check in the next few tits world I think we'll be talking with
corporation and financial markets and an exit row. Thanks for visit..
No comments:
Post a Comment