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Session 1a

The Role and Environment of Managerial Finance

Learning Goals

1. Define finance, its major areas and opportunities available in this field, and the legal forms of business organization. 2. Describe the managerial finance function and its relationship to economics and accounting. 3. Identify the primary activities of the financial manager. 4. Explain the goal of the firm, corporate governance, the role of ethics, and the agency issue.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

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Learning Goals (cont.)

5. Understand financial institutions and markets, and the role they play in managerial finance. 6. Discuss business taxes and their importance in financial decisions.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

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What is Finance?

• Finance can be defined as the art and science of managing money. • Finance is concerned with the process, institutions, markets, and instruments involved in the transfer of money among individuals, businesses, and governments.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

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Major Areas & Opportunities in Finance: Financial Services

• Financial Services is the area of finance concerned with the design and delivery of advice and financial products to individuals, businesses, and government. • Career opportunities include banking, personal financial planning, investments, real estate, and insurance.

Copyright © 2006 Pearson Addison-Wesley. All rights reserved.

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Major Areas & Opportunities in Finance: Managerial Finance

• Managerial finance is concerned with the duties of the financial manager in the business firm. • The financial manager actively manages the financial affairs of any type of business, whether private or public, large or small, profit-seeking or not-for-profit. • They are also more involved in developing corporate strategy and improving the firm’s competitive position.

Copyright © 2006 Pearson Addison-Wesley....