CH1 Ar

Financial Management: Core Concepts
Fourth Edition, Global Edition
Chapter 1
Financial Management
Copyright © 2023 Pearson Education, Ltd. All Rights Reserved.

Financial Management: Core Concepts Fourth Edition, Global Edition
‫ الطبعة العالمية‬،‫ المفاهيم األساسية الطبعة الرابعة‬:‫اإلدارة المالية‬
Chapter 1 Financial Management
‫الفصل األول اإلدارة المالية‬
.‫ جميع الحقوق محفوظة‬.Pearson Education, Ltd ‫ لشركة‬2023 © ‫حقوق الطبع والنشر‬
@xFxBot ‫) | ُترجمت بواسطة‬1( ‫صفحة‬
Learning Objectives (1 of 2)
1.1 Describe the cycle of money, the participants in the cycle,
and the common objective of borrowing and lending.
1.2 Distinguish the four main areas of finance and briefly
explain the financial activities that each encompasses.
1.3 Explain the different ways of classifying financial
markets.
1.4 Discuss the three main categories of financial
management.
1.5 Identify the main objective of the financial manager

)2 ‫ من‬1( ‫أهداف التعلم‬
1.1 Describe the cycle of money, the participants in the cycle, and the common objective of
borrowing and lending.
.‫ والهدف المشترك لالقتراض واإلقراض‬،‫ والمشاركين في الدورة‬،‫ وصف دورة المال‬1.1
1.2 Distinguish the four main areas of finance and briefly explain the financial activities that
each encompasses.
.‫ ميز بين المجاالت األربعة الرئيسية للتمويل واشرح بإيجاز األنشطة المالية التي يشملها كل منها‬1.2
1.3 Explain the different ways of classifying financial markets.
.‫ شرح الطرق المختلفة لتصنيف األسواق المالية‬1.3
1.4 Discuss the three main categories of financial management.
.‫ مناقشة الفئات الرئيسية الثالث لإلدارة المالية‬1.4
1.5 Identify the main objective of the financial manager
‫ تحديد الهدف الرئيسي للمدير المالي‬1.5
1.6 Explain how the finance manager interacts with both
internal and external players.
1.7 Delineate the main types of business organizations and
their respective advantages and disadvantages.
1.8 Illustrate agency theory and the principal-agent problem.
1.9 Define issues in corporate governance and business
ethics.
1.10 Explain why studying finance improves your
employability.

)2 ‫ من‬2( ‫أهداف التعلم‬
Explain how the finance manager interacts with both internal and external players.
.‫اشرح كيفية تفاعل المدير المالي مع الالعبين الداخليين والخارجيين‬
1.7 Delineate the main types of business organizations and their respective advantages and
disadvantages.
.‫ تحديد األنواع الرئيسية لمنظمات األعمال ومزاياها وعيوبها‬1.7
Illustrate agency theory and the principal-agent problem.
.‫توضيح نظرية الوكالة ومشكلة الوكيل الرئيسي‬
Define issues in corporate governance and business ethics.
.‫تحديد القضايا المتعلقة بحوكمة الشركات وأخالقيات العمل‬
1.10 Explain why studying finance improves your employability.
.‫ اشرح لماذا تعمل دراسة التمويل على تحسين قابليتك للتوظيف‬1.10

Definition of Finance and Financial
Management
• Finance is the art and science of managing wealth.
– It is about making decisions regarding what assets to buy/sell and
when to buy/sell these assets.
• Financial management is defined as those activities that

create or preserve the economic value of the assets of an
individual, small business, or corporation.

Definition of Finance and Financial Management
‫تعريف المالية واإلدارة المالية‬
• Finance is the art and science of managing wealth.
.‫• التمويل هو فن وعلم إدارة الثروات‬
– It is about making decisions regarding what assets to buy/sell and when to buy/sell these
assets.
.‫بيع هذه األصول‬/‫بيعها ومتى يتم شراء‬/‫ يتعلق األمر باتخاذ القرارات بشأن األصول التي يجب شراؤها‬-
• Financial management is defined as those activities that create or preserve the economic
value of the assets of an individual, small business, or corporation.
‫• يتم تعريف اإلدارة المالية على أنها تلك األنشطة التي تخلق أو تحافظ على القيمة االقتصادية ألصول فرد أو شركة‬
.‫صغيرة أو شركة‬
1.1 The Cycle of Money
• Financial intermediaries assist in the movement of money,
from lenders to borrowers and back again.
– This process is termed the cycle of money, and its main objective
is to make all the participants better off.
– In the business world, most lenders are not in direct contact with
their borrowers. Most lenders invest their money with a financial
institution such as a bank, which, in turn, loans these funds to
another party. Then The borrower makes payments back to the
bank, and the bank, in turn, pays back the lender.
The bank in this instance is called a financial intermediary.
– Financial intermediary: an institution that acts as a “middleman”
between borrowers and lenders.
– Figure 1.1 depicts these roles in the cycle of money.

1.1 The Cycle of Money
‫ دورة المال‬1.1
• Financial intermediaries assist in the movement of money, from lenders to borrowers and
back again.
.‫ من المقرضين إلى المقترضين والعودة مرة أخرى‬،‫• يساعد الوسطاء الماليون في حركة األموال‬
– This process is termed the cycle of money,and its main objective is to make all the
participants better off.
.‫ وهدفها الرئيسي هو جعل جميع المشاركين في وضع أفضل‬،‫– تسمى هذه العملية بدورة المال‬
– In the business world, most lenders are not in direct contact with their borrowers.
.‫ ال يكون معظم المقرضين على اتصال مباشر مع المقترضين‬،‫ في عالم األعمال‬-
Most lenders invest their money with a financial institution such as a bank, which, in turn,
loans these funds to another party.
.‫ الذي بدوره يقوم بإقراض هذه األموال لطرف آخر‬،‫يستثمر معظم المقرضين أموالهم في مؤسسة مالية مثل البنك‬
Then The borrower makes payments back to the bank, and the bank, in turn, pays back the
lender.
.‫ ويقوم البنك بدوره بالسداد للمقرض‬،‫ثم يقوم المقترض بسداد المبالغ إلى البنك‬
The bank in this instance is called a financial intermediary.
.‫ويسمى البنك في هذه الحالة بالوسيط المالي‬
– Financial intermediary: an institution that acts as a “middleman” between borrowers and
lenders.
.‫ مؤسسة تعمل “كوسيط” بين المقترضين والمقرضين‬:‫– الوسيط المالي‬
– Figure 1.1 depicts these roles in the cycle of money.
.‫ يصور هذه األدوار في دورة المال‬1.1 ‫– الشكل‬
Figure 1.1 The Money Cycle

‫ دورة المال‬1.1 ‫الشكل‬
Example 1: The Money Cycle
Example:
Paula decides to deposit $500 in the bank by purchasing a certificate of
deposit (CD). The CD is a promise by the bank that it will return the $500
and pay Paula $25 (5% interest) if she keeps the entire deposit in the
bank for one year.
Scott comes to the bank in need of $500 for a tuition payment. The bank
agrees to loan Scott $500 if he will repay the loan principal of $500 and an
additional $40 (8% interest) at the end of the year.
These transactions benefit all three parties—Scott, the bank, and Paula.
Scott is able to pay his tuition on time. If he then pays back $540 to the
bank, the bank can redeem Paula’s CD for $525 and keep $15 for the
services it provided:
(1) matching the borrower and lender and (2) bearing the risk that Scott
would not be able to pay back the loan with interest at the end of the year.

Example 1: The Money Cycle
‫ دورة المال‬:1 ‫المثال‬
Example:
:‫مثال‬
Paula decides to deposit $500 in the bank by purchasing a certificate of deposit (CD).
.)CD( ‫ دوالر في البنك عن طريق شراء شهادة إيداع‬500 ‫قررت باوال إيداع مبلغ‬
The CD is a promise by the bank that it will return the $500 and pay Paula $25 (5% interest) if
she keeps the entire deposit in the bank for one year.
‫) إذا احتفظت بكامل‬٪5 ‫ دوالًر ا (فائدة‬25 ‫ دوالر ويدفع لباوال‬500 ‫القرص المضغوط هو وعد من البنك بأنه سيعيد مبلغ‬
.‫الوديعة في البنك لمدة عام واحد‬
Scott comes to the bank in need of $500 for a tuition payment.
.‫ دوالر لدفع الرسوم الدراسية‬500 ‫يأتي سكوت إلى البنك وهو في حاجة إلى‬
‫‪The bank agrees to loan Scott $500 if he will repay the loan principal of $500 and an‬‬
‫‪additional $40 (8% interest) at the end of the year.‬‬
‫يوافق البنك على إقراض سكوت بمبلغ ‪ 500‬دوالر إذا قام بسداد أصل القرض البالغ ‪ 500‬دوالر ومبلغ إضافي قدره ‪40‬‬
‫دوالًر ا (فائدة ‪ )٪8‬في نهاية العام‪.‬‬
‫‪These transactions benefit all three parties—Scott, the bank, and Paula.‬‬
‫تعود هذه المعامالت بالنفع على األطراف الثالثة‪ :‬سكوت‪ ،‬والبنك‪ ،‬وباوال‪.‬‬
‫‪Scott is able to pay his tuition on time.‬‬
‫سكوت قادر على دفع رسومه الدراسية في الوقت المحدد‪.‬‬
‫‪If he then pays back $540 to the bank, the bank can redeem Paula’s CD for $525 and keep $15‬‬
‫‪for the services it provided: (1) matching the borrower and lender and (2) bearing the risk that‬‬
‫‪Scott would not be able to pay back the loan with interest at the end of the year.‬‬
‫إذا قام بعد ذلك بسداد ‪ 540‬دوالًر ا أمريكًيا للبنك‪ ،‬فيمكن للبنك استرداد القرص المضغوط الخاص بباوال بمبلغ ‪ 525‬دوالًر ا‬
‫أمريكًيا واالحتفاظ بمبلغ ‪ 15‬دوالًر ا أمريكًيا مقابل الخدمات التي يقدمها‪ )1( :‬مطابقة المقترض والمقرض و(‪ )2‬تحمل‬
‫مخاطر عدم تمكن سكوت من الدفع إرجاع القرض مع الفائدة في نهاية العام‪.‬‬
‫صفحة (‪ُ | )7‬ترجمت بواسطة ‪@xFxBot‬‬

1.2 Overview of Finance Areas
We often partition finance into four main areas:
• Corporate Finance
• Investments
• Financial Institutions and Markets
• International Finance

‫ نظرة عامة على المجاالت المالية‬1.2
:‫غالًبا ما نقوم بتقسيم التمويل إلى أربعة مجاالت رئيسية‬
• Corporate Finance
‫• تمويل الشركات‬
• Investments
‫• االستثمارات‬
• Financial Institutions and Markets
‫• المؤسسات المالية واألسواق‬
• International Finance
‫• تمويل خارجي‬

• Corporate Finance: the set of financial activities that support the operations of
a corporation or business, such as borrowing funds to finance projects and
repaying these borrowed funds
• Investments: the activities centering on the buying and selling of assets, both
real and financial.
- Real assets are physical assets such as property, buildings, and

commodities, including corn, oil, and gold.
- Financial assets are intangible assets such as stocks and bonds.

• Corporate Finance: the set of financial activities that support the operations of a corporation
or business, such as borrowing funds to finance projects and repaying these borrowed funds
‫ مثل اقتراض األموال لتمويل المشاريع‬،‫ مجموعة األنشطة المالية التي تدعم عمليات المؤسسة أو العمل‬:‫• تمويل الشركات‬
‫وسداد هذه األموال المقترضة‬
• Investments: the activities centering on the buying and selling of assets, both real and
financial.
.‫ األنشطة التي تتمحور حول شراء وبيع األصول بشقيها الحقيقي والمالي‬:‫• االستثمارات‬
- Real assets are physical assets such as property, buildings, and commodities, including corn,
oil, and gold.
.‫ بما في ذلك الذرة والنفط والذهب‬،‫ األصول الحقيقية هي األصول المادية مثل الممتلكات والمباني والسلع‬-
- Financial assets are intangible assets such as stocks and bonds.
.‫ األصول المالية هي أصول غير ملموسة مثل األسهم والسندات‬-
• Financial Institutions and Markets: the organized financial intermediaries
and the forums that promote the cycle of money. The institutions take the form
of commercial banks, investment banks, insurance companies, pension
companies, and foreign exchanges.
• International Finance: deals with the multinational aspects of the finance
activities

• Financial Institutions and Markets: the organized financial intermediaries and the forums that
promote the cycle of money.
.‫ الوسطاء الماليون المنظمون والمنتديات التي تروج لدورة المال‬:‫• المؤسسات المالية واألسواق‬
The institutions take the form of commercial banks, investment banks, insurance companies,
pension companies, and foreign exchanges.
.‫ والبورصات األجنبية‬،‫ وشركات التقاعد‬،‫ وشركات التأمين‬،‫ والبنوك االستثمارية‬،‫وتتخذ المؤسسات شكل البنوك التجارية‬
• International Finance: deals with the multinational aspects of the finance activities
‫ يتعامل مع الجوانب المتعددة الجنسيات لألنشطة المالية‬:‫• التمويل الدولي‬

1.3 Financial Markets
• Forums where buyers and sellers of financial assets and commodities
meet.
• Financial markets are the locations, both physical and virtual, where
transactions take place.
• Financial markets can be classified by:
– Type of asset traded
– Maturity of the financial asset
– Owner of the financial asset

‫ األسواق المالية‬1.3
• Forums where buyers and sellers of financial assets and commodities meet.
.‫• منتديات يلتقي فيها مشتري وبائعي األصول المالية والسلع‬
• Financial markets are the locations, both physical and virtual, where transactions take place.
.‫ التي تجري فيها المعامالت‬،‫ المادية واالفتراضية‬،‫• األسواق المالية هي المواقع‬
• Financial markets can be classified by:– Type of asset traded
‫ – نوع األصول المتداولة‬:‫• يمكن تصنيف األسواق المالية حسب‬
– Maturity of the financial asset– Owner of the financial asset
‫– استحقاق األصل المالي – مالك األصل المالي‬
1- Type of asset traded
 Equity markets, where stocks are bought and sold
 Debt markets, where bonds are bought and sold
 Derivatives markets, where futures contracts and options are bought and sold
 Foreign exchange markets, where currencies are bought and sold
2- Maturity of the financial asset

Maturity means the length of time the borrower has to pay back the borrowed funds.
 money market: Investors buy and sell financial assets that will mature within
the year in money markets. These assets are short-term loans.
 capital market: Financial assets that have maturities over a year transact in the
capital markets. These assets are long-term loans and may include bonds or
stocks.

‫ دورة المال‬1.1 ‫الشكل‬
2- Maturity of the financial asset
‫ استحقاق األصل المالي‬-2
Maturity means the length of time the borrower has to pay back the borrowed funds.
.‫النضج يعني طول الفترة الزمنية التي يتعين على المقترض فيها سداد األموال المقترضة‬
 money market: Investors buy and sell financial assets that will mature within the year in
money markets.
.‫ يقوم المستثمرون بشراء وبيع األصول المالية التي ستستحق خالل العام في أسواق المال‬:‫ سوق المال‬
These assets are short-term loans.
.‫هذه األصول هي قروض قصيرة األجل‬
 capital market: Financial assets that have maturities over a year transact in the capital
markets.
.‫ أصول مالية لها فترات استحقاق تزيد عن عام وتتداول في أسواق رأس المال‬:‫ سوق رأس المال‬
These assets are long-term loans and may include bonds or stocks.
.‫هذه األصول هي قروض طويلة األجل وقد تشمل السندات أو األسهم‬
3- Owner of the financial asset
 primary market: When a company offers stock for sale for the first time, the
sale takes place in the primary (first) market
 secondary market: After the initial public sale of stocks or bonds, the initial
buyer of the stock or bond may choose to resell the asset to another party.
When that happens, the sale takes place in the secondary market

‫ األسواق المالية‬1.3
• Financial markets can be classified by: 3- Owner of the financial asset
‫ مالك األصل المالي‬-3 :‫• يمكن تصنيف األسواق المالية حسب‬
 primary market: When a company offers stock for sale for the first time, the sale takes place
in the primary (first) market
)‫ فإن البيع يتم في السوق األولي (األول‬،‫ عندما تقوم الشركة بعرض أسهم للبيع ألول مرة‬:‫ السوق األولي‬
 secondary market: After the initial public sale of stocks or bonds, the initial buyer of the
stock or bond may choose to resell the asset to another party.
‫ قد يختار المشتري األولي للسهم أو السند إعادة بيع األصل‬،‫ بعد البيع العام األولي لألسهم أو السندات‬:‫ السوق الثانوية‬
.‫إلى طرف آخر‬
When that happens, the sale takes place in the secondary market
‫ يتم البيع في السوق الثانوية‬،‫عندما يحدث ذلك‬

1.4 The Finance Manager and Financial
Management (1 of 2)
Financial manager Responsibilities:
• Has to determine the best repayment structure for
borrowed funds.
• Makes sure that debt obligations are met on time.
• Ensures that sufficient funds are available for carrying out
daily operations.

1.4 The Finance Manager and Financial Management (1 of 2)
)2 ‫ من‬1( ‫ المدير المالي واإلدارة المالية‬1.4
Financial manager Responsibilities:
:‫مسؤوليات المدير المالي‬
• Has to determine the best repayment structure for borrowed funds.
.‫• يجب تحديد أفضل هيكل لسداد األموال المقترضة‬
• Makes sure that debt obligations are met on time.
.‫• يتأكد من الوفاء بالتزامات الديون في الوقت المحدد‬
• Ensures that sufficient funds are available for carrying out daily operations.
.‫• يضمن توافر األموال الكافية للقيام بالعمليات اليومية‬
1.4 The Finance Manager and Financial
Management (2 of 2)
Financial management involves three main functions:
• Capital Budgeting: the process of planning, evaluating, comparing,
and selecting the long-term operating projects of the company.
• Capital Structure: how a company finances its business activities; for
public companies, usually a mix of bonds (debt) and stocks (equity)
sold to investors and owners.
• Working Capital Management: the process of managing the day-to-
day operating needs of the company through its current assets and
current liabilities.

1.4 The Finance Manager and Financial Management (2 of 2)
)2 ‫ من‬2( ‫ المدير المالي واإلدارة المالية‬1.4
Financial management involves three main functions:
:‫تتضمن اإلدارة المالية ثالث وظائف رئيسية‬
• Capital Budgeting: the process of planning, evaluating, comparing, and selecting the long-
term operating projects of the company.
.‫ عملية التخطيط والتقييم والمقارنة واختيار المشاريع التشغيلية طويلة المدى للشركة‬:‫• الميزانية الرأسمالية‬
• Capital Structure: how a company finances its business activities; for public companies,
usually a mix of bonds (debt) and stocks (equity) sold to investors and owners.
‫ عادة ما يتم بيع مزيج من‬،‫ بالنسبة للشركات العامة‬.‫ كيف تقوم الشركة بتمويل أنشطتها التجارية‬:‫• هيكل رأس المال‬
.‫السندات (الديون) واألسهم (األسهم) للمستثمرين والمالكين‬
• Working Capital Management: the process of managing the day-to-day operating needs of
the company through its current assets and current liabilities.
‫ عملية إدارة االحتياجات التشغيلية اليومية للشركة من خالل أصولها المتداولة وخصومها‬:‫• إدارة رأس المال العامل‬
.‫المتداولة‬
1.5 Objective of the Finance Manager
To make investment and financing decisions that increase
the cash flow of the firm, thereby maximizing the current
stock price.

1.5 Objective of the Finance Manager
‫ هدف المدير المالي‬1.5
To make investment and financing decisions that increase the cash flow of the firm, thereby
maximizing the current stock price.
.‫ وبالتالي تعظيم سعر السهم الحالي‬،‫اتخاذ قرارات االستثمار والتمويل التي تزيد من التدفق النقدي للشركة‬
1.6 Internal and External Players
• Financial managers have to interact with various internal
and external stakeholders.
– Internal players include all the departmental managers and other
employees.
– External parties include:
 Customers
 Suppliers
 Government
 Creditors

1.6 Internal and External Players
‫ الالعبين الداخليين والخارجيين‬1.6
• Financial managers have to interact with various internal and external stakeholders.
.‫• يتعين على المديرين الماليين التفاعل مع مختلف أصحاب المصلحة الداخليين والخارجيين‬
– Internal players include all the departmental managers and other employees.
.‫– يشمل الالعبون الداخليون جميع مديري اإلدارات والموظفين اآلخرين‬
– External parties include:
:‫– األطراف الخارجية وتشمل‬
 Customers
‫ العمالء‬
 Suppliers
‫ الموردين‬
 Government
‫ الحكومة‬
 Creditors
‫ الدائنون‬
Figure 1.2 A Basic Organizational Chart for
a Company

Figure 1.2 A Basic Organizational Chart for a Company
‫ المخطط التنظيمي األساسي للشركة‬1.2 ‫الشكل‬
1.7 The Legal Forms of Business (1 of 6)
• There are three main legal categories of business
organizations:
– Sole proprietorship
– Partnership
– Corporation

)6 ‫ من‬1( ‫ األشكال القانونية لألعمال‬1.7
• There are three main legal categories of business organizations:
:‫• هناك ثالث فئات قانونية رئيسية لمنظمات األعمال‬
– Sole proprietorship
‫ ملكية فردية‬-
– Partnership
‫ شراكة‬-
– Corporation
‫ مؤَّس سة‬-
Sole Proprietorship: is a business owned entirely by an individual.
With this form of business, a person does business in his or her own
name.
• Advantages
1. Simplest and easiest form of business.
2. Least amount of legal documentation.
3. Least regulated.
4. Owner keeps all profits.
• Disadvantages
1. Owner pays personal tax rate on profits.
2. Obligations of the business are sole responsibility of owner, and personal
assets may be necessary to pay obligations (personal and business
assets are commingled).
3. Business entity limited to life of owner.
4. Can have limited access to outside funding for the business.
Sole Proprietorship: is a business owned entirely by an individual.
.‫ هي األعمال التجارية المملوكة بالكامل للفرد‬:‫الملكية الفردية‬
With this form of business, a person does business in his or her own name.
.‫ يقوم الشخص بأعمال تجارية باسمه الخاص‬،‫في هذا النوع من األعمال‬
• Advantages
‫• مزايا‬
Simplest and easiest form of business.
.‫أبسط وأسهل شكل من أشكال األعمال‬
Least amount of legal documentation.
.‫الحد األدنى من الوثائق القانونية‬
Least regulated.
.‫األقل تنظيما‬
Owner keeps all profits.
.‫يحتفظ المالك بجميع األرباح‬
• Disadvantages
‫• سلبيات‬
Owner pays personal tax rate on profits.
.‫يدفع المالك معدل الضريبة الشخصية على األرباح‬
Obligations of the business are sole responsibility of owner, and personal assets may be
necessary to pay obligations (personal and business assets are commingled).
‫ وقد تكون األصول الشخصية ضرورية لسداد االلتزامات (يتم خلط‬،‫إن التزامات الشركة هي مسؤولية المالك وحده‬
.)‫األصول الشخصية واألصول التجارية‬
Business entity limited to life of owner.
.‫كيان تجاري يقتصر على حياة المالك‬
Can have limited access to outside funding for the business.
.‫يمكن أن يكون لها وصول محدود إلى التمويل الخارجي للشركة‬
Partnership:
is a business owned jointly by two or more individuals. The partnership
agreement spells out the partners’ percentages of ownership and levels
of participation.
Partners can be:
1- general partners, who operate the daily business
2- limited partners, who participate only in certain aspects of the
business
3- silent partners, who participate in the business only as investors

Partnership: is a business owned jointly by two or more individuals.
.‫ هي األعمال المملوكة بشكل مشترك بين شخصين أو أكثر‬:‫الشراكة‬
The partnership agreement spells out the partners’ percentages of ownership and levels of
participation.
.‫تحدد اتفاقية الشراكة النسب المئوية لملكية الشركاء ومستويات المشاركة‬
Partners can be:
:‫يمكن أن يكون الشركاء‬
1- general partners, who operate the daily business
‫ الشركاء المتضامنون الذين يقومون بتسيير األعمال اليومية‬-1
2- limited partners, who participate only in certain aspects of the business
‫ الذين يشاركون فقط في جوانب معينة من العمل‬،‫ الشركاء المحدودون‬-2
3- silent partners, who participate in the business only as investors
‫ الذين يشاركون في األعمال كمستثمرين فقط‬،‫ الشركاء الصامتون‬-3
Partnership:
• Advantages
1. Agreements between partners may be easily formed.
2. Involves more individuals as owners and therefore usually more
expertise.
3. Larger amount of capital usually available to the business
(compared to proprietorship).
• Disadvantages
1. Assets of general partners are commingled with assets of the
business.
2. Profits treated as personal income for tax purposes.
3. Difficult to transfer ownership.

Partnership:
:‫شراكة‬
• Advantages
Agreements between partners may be easily formed.
.‫يمكن تشكيل االتفاقيات بين الشركاء بسهولة‬
Involves more individuals as owners and therefore usually more expertise.
.‫ وبالتالي عادة ما يكون لديهم المزيد من الخبرة‬،‫يشمل المزيد من األفراد كمالكين‬
Larger amount of capital usually available to the business (compared to proprietorship).
.)‫كمية أكبر من رأس المال المتاح عادة للشركة (مقارنة بالملكية‬
• Disadvantages 1.
.1 ‫• العيوب‬
Assets of general partners are commingled with assets of the business.
.‫يتم خلط أصول الشركاء العامين مع أصول الشركة‬
Profits treated as personal income for tax purposes.
.‫يتم التعامل مع األرباح كدخل شخصي لألغراض الضريبية‬
Difficult to transfer ownership.
.‫من الصعب نقل الملكية‬
Corporation:
is a legal entity separate from its owners, meaning that it can enter
into contracts, can sue or be sued, and pays taxes.
The structure of a corporation separates the owners and managers

of the firm.

Corporation: is a legal entity separate from its owners, meaning that it can enter into contracts,
can sue or be sued, and pays taxes.
‫ ويمكن أن ترفع دعوى أو ترفع دعوى‬،‫ أي أنها يمكن أن تبرم العقود‬،‫ هي كيان اعتباري منفصل عن أصحابه‬:‫الشركة‬
.‫ وتدفع الضرائب‬،‫قضائية عليها‬
The structure of a corporation separates the owners and managers of the firm.
.‫هيكل الشركة يفصل بين أصحاب ومديري الشركة‬
Corporation
• Advantages
1. Business is legal, separate entity from owners.
2. Owners have limited liability to obligations of the business.
3. Easy to transfer ownership.
4. Usually, greater access to capital for business.
5. Owners do not have any personal liability for default.
• Disadvantages
1. Most difficult business operation to form.
2. Double taxation of company profits.
3. Most regulated.

1.7 The Legal Forms of Business (5 of 6) Corporation
‫) الشركة‬6 ‫ من‬5( ‫ األشكال القانونية لألعمال التجارية‬1.7
• Advantages
Business is legal, separate entity from owners.
.‫ كيان منفصل عن المالكين‬،‫العمل قانوني‬
Owners have limited liability to obligations of the business.
.‫يتحمل المالكون مسؤولية محدودة تجاه التزامات الشركة‬
Easy to transfer ownership.
.‫سهولة نقل الملكية‬
Usually, greater access to capital for business.
.‫ زيادة الوصول إلى رأس المال لألعمال التجارية‬،‫عادة‬
Owners do not have any personal liability for default.
.‫ال يتحمل المالكون أي مسؤولية شخصية عن التقصير‬
• Disadvantages
‫• سلبيات‬
Most difficult business operation to form.
.‫أصعب العمليات التجارية التي يمكن تشكيلها‬
Double taxation of company profits.
.‫االزدواج الضريبي على أرباح الشركات‬
Most regulated.
.‫األكثر تنظيما‬
1.8 The Agency Conflict (1 of 3)
Why does it arise?
The owners of the business, hire the managers to act in the

owners’ best interests and maximize the current stock price.
The managers want to earn high wages and receive

benefits from the performance of their jobs.
Are these interests always aligned? No

)3 ‫ من‬1( ‫ صراع الوكالة‬1.8
Why does it arise?
‫لماذا تنشأ؟‬
The owners of the business, hire the managers to act in the owners’ best interests and
maximize the current stock price.
.‫يقوم أصحاب األعمال بتعيين المديرين للعمل بما يحقق مصالح المالكين وتعظيم سعر السهم الحالي‬
The managers want to earn high wages and receive benefits from the performance of their
jobs.
.‫يريد المديرون الحصول على أجور عالية والحصول على فوائد من أداء وظائفهم‬
Are these interests always aligned?
‫فهل تتوافق هذه المصالح دائًم ا؟‬
No
‫ال‬
Why does it arise?
A natural conflict arises because The managers cannot maximize the

current stock price without forgoing some of their personal compensation
or bonus.
This conflict raises a potential problem in the relationship between

owners and managers. Because Managers want to maximize their own
compensation, which may be costly to the owners.
The costs incurred to align managers’ interests with those of the owners
and the associated costs for which the owners pay, are agency costs.

Why does it arise?
‫لماذا تنشأ؟‬
A natural conflict arises because The managers cannot maximize the current stock price
without forgoing some of their personal compensation or bonus.
‫ينشأ صراع طبيعي ألن المديرين ال يستطيعون تعظيم سعر السهم الحالي دون التنازل عن بعض تعويضاتهم الشخصية أو‬
.‫مكافآتهم‬
This conflict raises a potential problem in the relationship between owners and managers.
.‫يثير هذا الصراع مشكلة محتملة في العالقة بين المالكين والمديرين‬
Because Managers want to maximize their own compensation, which may be costly to the
owners.
.‫ األمر الذي قد يكون مكلًفا للمالكين‬،‫ألن المديرين يريدون تعظيم التعويضات الخاصة بهم‬
The costs incurred to align managers’ interests with those of the owners and the associated
costs for which the owners pay, are agency costs.
‫ هي تكاليف‬،‫التكاليف المتكبدة لمواءمة مصالح المديرين مع مصالح المالكين والتكاليف المرتبطة بها التي يدفعها المالكون‬
.‫وكالة‬
How it can be minimized?
The owners of the company want the managers to make the right choice
that is, to choose those actions that most benefit the owners and are most
consistent with their values. If the owner is present and can observe a
manager’s choice, the owner can then reward the right choice and punish
the wrong one.
However, shareholders (the owners) are spread out around the world and
cannot observe a manager’s actions. They will need to:
1- hire auditors to confirm that they have made the right choice
2- or construct compensation contracts that help managers make the
right choice. Shareholders can provide the appropriate bonus incentive to
top managers by tying part of their compensation to the performance of the
company’s stock.
How it can be minimized?
‫كيف يمكن التقليل منها؟‬
The owners of the company want the managers to make the right choice that is, to choose
those actions that most benefit the owners and are most consistent with their values.
‫ أي اختيار تلك اإلجراءات التي تعود بالنفع على المالكين‬،‫يريد أصحاب الشركة من المديرين أن يتخذوا القرار الصحيح‬
.‫واألكثر اتساًقا مع قيمهم‬
If the owner is present and can observe a manager’s choice, the owner can then reward the
right choice and punish the wrong one.
‫ فيمكن للمالك بعد ذلك مكافأة االختيار الصحيح ومعاقبة الخيار‬،‫إذا كان المالك حاضًر ا ويمكنه مالحظة اختيار المدير‬
.‫الخاطئ‬
However, shareholders (the owners) are spread out around the world and cannot observe a
manager’s actions.
.‫ فإن المساهمين (المالكين) منتشرون في جميع أنحاء العالم وال يمكنهم مراقبة تصرفات المدير‬،‫ومع ذلك‬
They will need to:
:‫سوف يحتاجون إلى‬
1- hire auditors to confirm that they have made the right choice 2- or construct compensation
contracts that help managers make the right choice.
‫ أو إنشاء عقود تعويض تساعد المديرين على اتخاذ االختيار‬-2 .‫ تعيين مدققين للتأكد من أنهم قاموا باالختيار الصحيح‬-1
.‫الصحيح‬
Shareholders can provide the appropriate bonus incentive to top managers by tying part of
their compensation to the performance of the company’s stock.
.‫يمكن للمساهمين تقديم حوافز المكافآت المناسبة لكبار المديرين من خالل ربط جزء من تعويضاتهم بأداء أسهم الشركة‬
1.9 Corporate Governance
• Corporate governance deals with….
– how a company conducts its business and implements controls to
ensure proper procedures and ethical behavior.

1.9 Corporate Governance
‫ حوكمة الشركات‬1.9
• Corporate governance deals with….
.…‫• تتناول حوكمة الشركات‬
– how a company conducts its business and implements controls to ensure proper procedures
and ethical behavior.
.‫– كيفية إدارة الشركة ألعمالها وتنفيذ الضوابط لضمان اإلجراءات الصحيحة والسلوك األخالقي‬
1.10 Why Study Finance?
• Understand how and why financial decisions are made in
large and small companies.
• Helps individuals increase their own compensations.
• Improves contributions to the success of the companies
that people work for.
• Understand the trade-offs we face in making personal
financial choices and help us to select the most
appropriate action.

1.10 Why Study Finance?
‫ لماذا دراسة التمويل؟‬1.10
• Understand how and why financial decisions are made in large and small companies.
.‫• فهم كيف ولماذا يتم اتخاذ القرارات المالية في الشركات الكبيرة والصغيرة‬
• Helps individuals increase their own compensations.
.‫• يساعد األفراد على زيادة التعويضات الخاصة بهم‬
• Improves contributions to the success of the companies that people work for.
.‫• تحسين المساهمات في نجاح الشركات التي يعمل بها األشخاص‬
• Understand the trade-offs we face in making personal financial choices and help us to select
the most appropriate action.
.‫• فهم المقايضات التي نواجهها عند اتخاذ الخيارات المالية الشخصية ومساعدتنا في اختيار اإلجراء األكثر مالءمة‬

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Financial Management: Core Concepts

Fourth Edition, Global Edition

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• Financial management is defined as those activities that

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- Real assets are physical assets such as property, buildings, and

- Financial assets are intangible assets such as stocks and bonds.

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2- Maturity of the financial asset

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The structure of a corporation separates the owners and managers

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The owners of the business, hire the managers to act in the

The managers want to earn high wages and receive

Are these interests always aligned? No

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A natural conflict arises because The managers cannot maximize the

This conflict raises a potential problem in the relationship between

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Copyright © 2023 Pearson Education, Ltd. All Rights Reserved.

Copyright © 2023 Pearson Education, Ltd. All Rights Reserved.

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