Aturan Main

FUNDAMENTAL
Kehadiran mahasiswa  Minimal 70%.
S of Corporate 1.
2. Membawa kalkulator dan textbook setiap kali pertemuan.
FINANCE 3. Kuis diadakan tanpa pemberitahuan sebelumnya.
Chapter 1 4. Tidak ada bunyi handphone/ blackberry/alat elektronik selama
perkuliahan berlangsung. (Bila gadget berbunyi, termasuk FM 
Denda Rp 50.000).
5. Tidak menggunakan berbagai handphone/ blackberry/ laptop/
SECOND EDITION “gadget” lainnya selama perkuliahan berlangsung.
6. Bila ada yang ke Toilet, harus satu per satu atau gantian.
Stephen A. Ross 7. Tidak makan atau minum selama perkuliahan berlangsung.
Randolph W. Westerfield 8. Tidak tidur selama perkuliahan berlangsung.
Bradford D. Jordan 9. Tidak ngobrol, ribut, atau partisipasi negatif lainnya selama
Joseph Lim perkuliahan berlangsung.
Ruth Tan Pelanggaran atas poin 5 sampai 9 merupakan perilaku yang
termasuk dalam pelanggaran non akademis yang terdapat dalam
Buku Panduan Mahasiswa poin 5.3.1 nomor 10.

Copyright © 2016 by McGraw-Hill Education. All rights reserved.

Connect Assignment :
Key Concepts and Skills
There is an assignment every week, so please register by
yourself to this address link below.
• Know the basic types of financial
Class Class URL management decisions and the role of the
financial manager
4D https://connect.mheducation.com/class/h-suthiono-
Marketing pemasaran-2016---4d • Know the financial implications of the
different forms of business organization
• Know the goal of financial management
If you need help about Connect website, please contact : • Understand the conflicts of interest that can
Pak Winata H Wijaya (Indonesian McGraw Hill Manager) arise between owners and managers
021-28899961
0811-945937
• Understand the various types of financial
0816-1867634 markets
winata@mge.co.id
1-3

1
 Chapter Outline What Is Corporate Finance?

• Corporate Finance and the Financial • Corporate finance provides answers

Manager to some important questions:
• Forms of Business Organization – What long-term investments should the
firm take on?
• The Goal of Financial Management
– Where will the firm get the long-term
• The Agency Problem and Control of financing to pay for the investments?
the Corporation
– How will the firm manage its everyday
• Financial Markets and the financial activities?
Corporation
1-4 1-5

The Financial Manager Financial Management

Decisions
• Financial managers try to answer some or all • Capital budgeting
of these questions – What long-term investments or projects
• The top financial manager within a firm is should the business take on?
usually the Chief Financial Officer (CFO) • Capital structure
– Treasurer – oversees cash management, credit – How much should the firm borrow to pay
management, capital expenditures, and financial for its assets?
planning
• What is the best mixture of debt and equity?
– Controller – oversees taxes, cost accounting,
• The least expensive sources of funds?
financial accounting and data processing
• Working capital management
– How do we manage the day-to-day
1-6 finances of the firm? 1-7

2
 Forms of Business Sole Proprietorship
Organization
• Three major forms • Advantages • Disadvantages
– Sole Proprietorship – Easiest to start – Limited to life of
– Least regulated owner
– Partnership – Equity capital
– Single owner keeps
• General all the profits limited to owner’s
• Limited – Taxed once as personal wealth
– Corporation personal income – Unlimited liability
• Limited Liability Company – Difficult to sell
ownership interest
• Limited Liability Partnerships

1-8 1-9

Partnership Corporation
• Advantages • Disadvantages • Advantages • Disadvantages
– Two or more – Unlimited liability – Limited liability – Separation of
owners • General partnership – Unlimited life ownership and
– More capital • Limited partnership – Separation of management
available – Partnership ownership and – May involve double
– Relatively easy to dissolves when one management taxation in some
start partner dies or – Transfer of countries(income
– Income taxed once wishes to sell ownership is easy taxed at the
as personal income – Difficult to transfer corporate rate and
– Easier to raise then dividends
ownership capital taxed at the
personal rate)
1-10 1-11

3
 Summary of 3 Business Goal of Financial
Forms Management
• What should be the goal of a corporation?
– Maximize profits?
– Minimize costs?
– Maximize market share?
– Maximize the current value of the company’s
stock?

1-12 1-13

Maximizing shareholders’ The Agency Problem

wealth
• Maximizing the share price is • Agency relationship
equivalent to maximizing – The relationship exists when a principal
shareholders’ wealth hires an agent to represent his/her
interests
• Why is this a valid goal? – Stockholders (principals) hire managers
– Decisions are made in shareholders‘ (agents) to run the company
best interest • Agency problem
– Considers cash flows not profits – Conflict of interest between principal and
– Incorporates time dimension agent
• Agent may not work in the best interest of the
– Does not consider profitability but principal
also risk 1-15

4
 Management Goals Agency Costs

• Management goals may be different • Costs due to the conflict of interest

from shareholders’ goals between shareholders and management
– Management may be more interested in: – Direct
• Corporate expenditure that benefits
• Consuming expensive perks
management but costs shareholders,
• It’s own survival e.g. country club membership
• It’s independence • Costs to monitor management actions,
e.g. auditor costs
• Management may focus on increased
– Indirect
growth and size rather than increasing • Lost opportunity due to management forgoing
shareholders’ wealth profitable but risky projects for fear of losing job
if project fails
1-17

Managing Managers Financial Markets

• Managerial compensation • Primary market
– Incentives can be used to align management
and stockholder interests – A market where the firm sells its
– The incentives need to be structured carefully to securities to public for the first time
make sure that they achieve their goal
• Secondary markets
• Corporate control
– The threat of a takeover may result in better
– A market in which the securities issued
management by firms are traded
• Other stakeholders • Listed securities trade in an organized
exchange, e.g. the stock market (NYSE)
• Over-the-counter securities are bought from
or sold to a dealer
1-18 1-19

5
 Quick Quiz
• What are the three types of financial
management decisions and what questions
are they designed to answer?
• What are the three major forms of business
organization?
• What is the goal of financial management?
• What are agency problems and why do they
exist within a corporation?
• What is the difference between a primary
market and a secondary market?
1-20
End of Chapter
1-22
Ethics Issues
• Is it ethical for tobacco companies to sell a product
that is known to be addictive and a danger to the
health of the user? Is it relevant that the product is
legal?
• Should boards of directors consider only price when
faced with a buyout offer?
• Is it ethical to concentrate only on shareholder wealth,
or should stakeholders as a whole be considered?
• Should firms be penalized for attempting to improve
returns by stifling competition (e.g., Microsoft)?
1-21