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FINANCIALFINANCIALMANAGEMENMANAGEMEN
TT II II
FINANCIALFINANCIALMANAGEMENMANAGEMEN
TT II II
Risks
Financial Management IFinancial Management IFinancial Management IFinancial Management I
Organizational Purpose and GoalsOrganizational Purpose and Goals
Financial PoliciesFinancial Policies
StrategiesStrategies
DecisionsDecisions• Asset managementAsset management• Investment decisionsInvestment decisions• Financing decisionsFinancing decisions• Dividend policyDividend policy• Valuation of the firmValuation of the firm
Financial Management IIFinancial Management IIFinancial Management IIFinancial Management II
Analysis
Wealth maximizationLong-term financingCapital budgetingRisk managementCapital acquisition analysisCapital structure decisionDividend decisionValuation of financial instruments
FINANCIAL MANAGEMENT II
Topics under Financial Management II
• Risk and Return of Assets• Risk Management• Valuation of Financial Assets
Bonds Stocks
• Long-term Investment Decisions Capital Budgeting Advanced Investing Decisions
• Long-term Financing Decisions Cost of Capital Leverage and Capital Structure Dividend Policy
FINANCIAL MANAGEMENT II
Topics under Financial Management II
• Mergers and Acquisitions• International Financial Management Decisions• Financial Objectives of Special Types of
Organizations• Financial Management in the Public Sector• Other Topics
FINANCIAL MANAGEMENT II
Strategies/Methods of Learning the Course
• Lecture (concepts, principles, computations, casestudies)
• Recitations• Seatwork (includes solving exercises/problems in
the blackboard and explaining the answers/solutions
• Assignments (readings, exercises/problems forsolving)
• Group Discussion/Group Presentation• Invitation of resource speakers (accomplished
individuals or experts in the field)
FINANCIAL MANAGEMENT II
Let’s have a quick review of Let’s have a quick review of Financial Management I !Financial Management I !
FINANCIAL MANAGEMENT II
What isWhat isFinancial Financial
Management?Management?
FINANCIAL MANAGEMENT II
Financial management Financial management is the business function that is the business function that concerns the concerns the acquisitionacquisition, , financingfinancing and and management management of assetsof assets with the with the primary primary goal of maximizing goal of maximizing shareholders’ wealthshareholders’ wealth by by increasing the value of their increasing the value of their shares. shares.
FINANCIAL MANAGEMENT II
Investment DecisionsInvestment Decisions
What is the optimal firm size?What is the optimal firm size? What specific assets should be What specific assets should be
acquired?acquired? What assets (if any) should be What assets (if any) should be
reduced or eliminated?reduced or eliminated?
FINANCIAL MANAGEMENT II
Financing DecisionsFinancing Decisions
What is the best type of financing? What is the best type of financing? What is the best financing mix?What is the best financing mix?What is the best dividend policy?What is the best dividend policy?How will the funds be physically How will the funds be physically acquired?acquired?
FINANCIAL MANAGEMENT II
Asset Management DecisionsAsset Management Decisions
How do we manage existing assetsHow do we manage existing assetsefficiently?efficiently?
Trade-off
DailyDaily Cash management
(receipt and disbursement of funds) Credit management
Inventory control Short-term financing Exchange and interest rate hedging Bank relations
Intermediate financingBond issuesLeasingStock issuesCapital budgetingDividend decisionsForecasting
ProfitabilityProfitability
Risk
Goal:Goal:MaximizeMaximizeshareholdershareholderwealthwealth
PPT 1-10
Occasional
FINANCIAL MANAGEMENT II
Functions of the Finance ManagerFunctions of the Finance Manager
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