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Financial management CH1 (determination of fundamental value (expected…
Financial management CH1
the importance of financial management
corporate strategies to add value
forecast requirements and acquiring funds
Form of coporate
agency problem
own their own interest
corporate governance
set of reles
objectives
shareholder wealth maxiumization
have responsible for society at large
behave ethically
determination of fundamental value
expected cash flow higher
risk (less is better)
timing ( sooner is better)
Free cash flow= sales revenues-operating cost - operating tax - required investments in operating capital
Weighted Average Cost of Capital
Intrinsic Value = Sum of the present value of all future expected free cash flow