FINANCIAL MANAGEEMNT

1
FINANCIAL MANAGEEMNT

• Instructor Khuda Bux Qureshi
• Course Code MG 311
• Credit Hours 03
• Semester Fall 2006
• Prerequisite Introduction to Bus. Finance
• Days Wednesday 1045 1240
• Thursday 1045 1140

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Finance

• Field of Finance is divided into three areas
• Money Capital Markets
• Investment
• Managerial Finance

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Money Capital Markets

• These include all institutions or organizations
  that are involved in financial intermediation
  between savers (those who have surplus money) and
  borrowers (those who have deficit of funds).

4
Investment

• This involves determining where to make
  investments from individuals or companies, And
  determining the optimal mix of securities and
  other investments.

5
Managerial Finance

• Issues related to managerial finance range from
  decisions regarding expanding a business to
  choosing what types of securities to issue or
  finance and what type of investments to
  undertake.
• Managerial finance also involves analyzing the
  performance of the firm in order to forecast its
  future performance

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Financial Manager
Daily Activities
Working Capital Management
7
Financial Manager
Occasional
Issue of Shares Issue of Bonds Capital
Budgeting Dividend Decisions'
8
Financial Manager
Profitability
Trade Off Risk
9
Financial Manager
Maximization of Shareholders Wealth
10
Forms of Business Organizations

• Sole Proprietorship
• Partnership
• Corporation

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The Goals of the Corporation

• Managerial Incentives to Maximise Shareholders
  Wealth
• Social Responsibility

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Agency Relationship

• Agency Conflicts
• Agency cost
• Audit Cost
• Expenditures to Structure the Organization
• Opportunity Cost
• Managerial Incentives
• Performance-Based Incentive Plans
• Direct Intervention by Shareholders
• The Threat of Firing
• Takeovers

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Major Factors Affecting Stock Prices

• External Factors
• Antitrust Laws
• Environmental Regulations
• Product Workplace Safety Regulations
• Employment Practices Rules
• Federal Reserve Policy
• International Development
• And so forth

Level of Economic Activity and Corporate Taxes

• Strategic Policy Decisions
• Types of Products or Services Produced
• Productivity Methods Used
• Research Development Efforts
• Relative Use of Debt Financing
• Dividend Policy
• And so forth

Stock Market Conditions
Expected Profitability
Timing of Cash Flows
Stock Price
Degree of Risk