Key Bussines Finance Chapter1

Part 1

Introduction to Managerial Finance

Chapters in this Part

Chapter 1 The Role and Environment of Managerial Finance

Chapter 2 Financial Statements and Analysis

Chapter 3 Cash Flow and Financial Planning

Integrative Case 1: Track Software, Inc.

Chapter 1

The Role and Environment of Managerial Finance

( Instructor’s Resources

Overview

This chapter introduces the student to the field of finance and explores career opportunities in both financial services and managerial finance. The three basic legal forms of business organization (sole proprietorship, partnership, and corporation) and their strengths and weaknesses are described, as well as the relationship between major parties in a corporation. The managerial finance function is defined and differentiated from economics and accounting. The chapter then summarizes the three key activities of the financial manager: financial analysis and planning, investment decisions, and financing decisions. A discussion of the financial manager’s goals—maximizing shareholder wealth and preserving stakeholder wealth—and the role of ethics in meeting these goals is presented. The chapter includes discussion of the agency problem—the conflict that exists between managers and owners in a large corporation. Money and capital markets and their major components are introduced in this chapter. The final section covers a discussion of the impact of taxation on the firm’s financial activities.

Study Guide

The following Study Guide example is suggested for classroom presentation:

|Example |Topic |

|1 |Earnings per share |

|3 |Income tax calculation |

( Suggested Answer to Chapter Opening Critical

Thinking Question

What additional concerns might a corporate CFO face when a company expands into international markets?

Besides the problem of currency risk, there are tax issues, personnel considerations and local...