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INTRODUCTION TO CORPORATE FINANCE - Coggle Diagram
INTRODUCTION TO CORPORATE FINANCE
Corporate Finance
Involves the management of company’s resources to its full potential
Corporation:- Rights, duties and privileges of person
Finance:- Finance the management of money
Investing
Borrowing
Lending
Budgeting
Forecasting
Saving
Financial Management
The process of planning, organizing, controlling and monitoring financial resources with a view to achieve organizational goals and objectives.
Concerned on the use of funds by business firm.
Related to economics and accounting.
Source of Finance
Borrowing
Long-Term Debt
Short-Term Debt
Capital
Common Equity
Retained Earning
Issues new shares
Preferred Stock
Functions of Financial Manager
Forecasting and Planning
Dividend Policy
Investment Decisions
Financing Decisions
Dealing with Financial Markets
Goals of Financial Management
Minimization of Risk
Maximization of Sales
Maximization of Profits
Maximization of Share Price
Control of the Corporation
The election of Board of Directors
Control of the firm ultimately rest with stockholder
Financial Market
Primary Market
Issuance of security for the first time
Secondary Market
Buying and selling previously issued securities
Forms of Business Organisation
Sole Proprietorships
Owner (1), easy to form, termination occurs when owner died or by his/her choice
Partnership
Owner (1 or more), profit and loss sharing with mutual agreement, can raise more capital
Corporations
Legally functions separate from its owners, can sue, be sued, purchase/sell property. Shareholder's liability is restricted. Ownership can easily be transferred.