Principles of

Corporate Finance
Chapter 1 Eighth Edition

Finance and The

Financial Manager
Slides by
Matthew Will

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Topics Covered

 What Is A Corporation?
 The Role of The Financial Manager
 Who Is The Financial Manager?
 Separation of Ownership and Management

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Corporate Structure

Sole Proprietorships
Unlimited Liability
Personal tax on profits
Partnerships

Limited Liability
Corporations Corporate tax on profits +
Personal tax on dividends
(dividend distribution tax as
of now in India)

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Role of The Financial Manager

(2) (1)

Firm's Financial Financial

(4a)
operations manager markets

(3) (4b)

(1) Cash raised from investors

(2) Cash invested in firm
(3) Cash generated by operations
(4a) Cash reinvested
(4b) Cash returned to investors

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Role of The Financial Manager

 Common Finance Terminology

– Real assets
– Financial assets / Securities
– Capital markets and financial
markets
– Investment / capital budgeting
– Financing

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Who is The Financial Manager?

Chief
ChiefFinancial
FinancialOfficer
Officer

Treasurer Controller

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Ownership vs. Management

Difference in Information Different Objectives

 Stock prices and returns  Managers vs.

 Issues of shares and stockholders
other securities  Top mgmt vs.
 Dividends operating mgmt
 Financing  Stockholders vs. banks
and lenders

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Web Resources
Click to access web sites
Internet connection required

www.careers-in-finance.com/
www.careers.wsj.com
www.wageweb.com
www.corpgov.net
www.thecorporatelibrary.com

McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved