1. Chapter 1 Principles PrinciplesofCorporateFinance Ninth Edition Finance and The Financial Manager Slides by Matthew Will Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved McGraw Hill/Irwin

2. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 2 McGraw Hill/Irwin Topics Covered  What Is A Corporation?  The Role of The Financial Manager  Who Is The Financial Manager?  Separation of Ownership and Management

3. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 3 McGraw Hill/Irwin Corporate Structure Sole Proprietorships Corporations Partnerships Limited Liability Corporate tax on profits + Personal tax on dividends Unlimited Liability Personal tax on profits

4. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 4 McGraw Hill/Irwin Organizing a Business

5. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 5 McGraw Hill/Irwin Financial Market Functions  Source of funding  Investor liquidity  Risk management  Source of information

6. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 6 McGraw Hill/Irwin Role of The Financial Manager Financial manager Firm's operations Financial markets (1) Cash raised from investors (1) (2) Cash invested in firm (2) (3) Cash generated by operations (3) (4a) Cash reinvested (4a) (4b) Cash returned to investors (4b)

7. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 7 McGraw Hill/Irwin Role of The Financial Manager  Common Finance Terminology –Real assets –Financial assets / Securities –Capital markets and financial markets –Investment / capital budgeting –Financing

8. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 8 McGraw Hill/Irwin Who is The Financial Manager? Chief Financial Officer Controller Treasurer

9. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 9 McGraw Hill/Irwin Ownership vs. Management Difference in Information  Stock prices and returns  Issues of shares and other securities  Dividends  Financing Different Objectives  Managers vs. stockholders  Top mgmt vs. operating mgmt  Stockholders vs. banks and lenders

10. Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved 1- 10 McGraw Hill/Irwin Web Resources www.careers-in-finance.com www.careers.wsj.com www.wageweb.com www.corpgov.net www.thecorporatelibrary.com Click to access web sites Internet connection required