CORPORATE FINANCE
The Corporation
FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 1
CORPORATE FINANCE
Welcome
Bio
Contact info
FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 2
CORPORATE FINANCE
Ice Breaking!
FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 3
CORPORATE FINANCE
Let’s review our course syllabus!
FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 4
THE CORPORATION
Why study Corporate Finance?
An understanding of why and how financial decisions
are made is essential.
Th...
THE CORPORATION
SPECIFIC CONTENT OBJECTIVES
UPON COMPLETION OF THIS WORKSHOP, THE STUDENT
WILL BE ABLE TO:
1. List and def...
THE CORPORATION
SPECIFIC CONTENT OBJECTIVES
3. Understand the difference between
a Public and a Private Company.
4. Unders...
THE CORPORATION
THE FOUR TYPES OF FIRMS
• Sole Proprietorship
• Partnership
• Limited Liability Company (LLC)
• Corporatio...
THE CORPORATION
THE FOUR TYPES OF FIRMS
Video: Types of Businesses
http://www.youtube.com/watch?v=gQkjdbHqGaQ
Activity: Sc...
THE CORPORATION
THE FOUR TYPES OF FIRMS
AS OF 2013 IN THE U.S.
Source: www.bizstats.com
FTC Pembroke Pines - Corporate Fin...
THE CORPORATION
THE FOUR TYPES OF FIRMS (CONT.)
Sole Proprietorship
• Business is owned and run by one person
• Typically ...
THE CORPORATION
THE FOUR TYPES OF FIRMS (CONT.)
Partnership
• Similar to a sole proprietorship, but with
more than one own...
THE CORPORATION
THE FOUR TYPES OF FIRMS (CONT.)
Limited Liability Company (LLC)
• All owners have limited liability but th...
THE CORPORATION
THE FOUR TYPES OF FIRMS (CONT.)
Corporation
A legal entity separate from its owners.
• Has many of the leg...
THE CORPORATION
THE FOUR TYPES OF FIRMS (CONT.)
Corporation
Ownership.
• Represented by shares of stock.
• Owner of stock ...
THE CORPORATION
Ownership versus Control of Corporations
Financial Manager
Responsible for:
• Investment Decisions
• Finan...
THE CORPORATION
Ownership versus Control of Corporations
Financial Manager
Activity: Scaffolding activity (groups of 3
stu...
THE CORPORATION
Ownership versus Control of Corporations
Goal of the Firm
Shareholders will agree that they
are better off...
THE CORPORATION
The Stock Market
• Public Company
Stock is traded by the public on a
stock exchange.
• Private Company
Sto...
THE CORPORATION
The Stock Market (cont.)
• Primary Markets
When a corporation itself issues new shares
of stock and sells ...
THE CORPORATION
The Stock Market (cont.)
Video: Types of Common Stock
http://www.youtube.com/watch?v=Hca0PMDv6WA
Activity:...
THE CORPORATION
The Stock Market (cont.)
Largest Stock Markets (Volume of shares and
Value of domestic corporations)
• New...
THE CORPORATION
Worldwide Stock Markets Ranked by Two Common
Measures as of 2013
Source: www.world-exchanges.org
FTC Pembr...
THE CORPORATION
Vocabulary
• NASDAQ
• NYSE
• CEO-Chief Financial Officer
• Partnership
• Primary Market
• Private Companie...
THE CORPORATION
Vocabulary
• “S” corporation
• Secondary Market
• Shareholder
• Sole proprietorship
• Stock
• Stock Market...
THE CORPORATION
Q & A
FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 26
THE CORPORATION
Assessment - Chapter Quiz
1. What are the four types of firms?
2. What type of firm generates most revenue...
THE CORPORATION
References
Berk, J. & DeMarzo, P. (2014). Corporate Finance: The Core. 3rd ed.
Boston, MA: Pearson Prentic...
THE CORPORATION
Thank you all and I
will see you on our
next class!
FTC Pembroke Pines - Corporate Finance - Manuel Christ...
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FTC finance class

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Finance class introducing 'The Corporation' concepts, similarities, differences, advantages, and disadvantages.

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FTC finance class

  1. 1. CORPORATE FINANCE The Corporation FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 1
  2. 2. CORPORATE FINANCE Welcome Bio Contact info FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 2
  3. 3. CORPORATE FINANCE Ice Breaking! FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 3
  4. 4. CORPORATE FINANCE Let’s review our course syllabus! FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 4
  5. 5. THE CORPORATION Why study Corporate Finance? An understanding of why and how financial decisions are made is essential. The focus on this course is to understand and learn … how to make optimal corporate financial decisions. how a corporation is structured and its related business forms. how is the role of financial managers in making financial decisions for the firm. how the decision making of financial managers requires information (firm’s fin. statements). FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 5
  6. 6. THE CORPORATION SPECIFIC CONTENT OBJECTIVES UPON COMPLETION OF THIS WORKSHOP, THE STUDENT WILL BE ABLE TO: 1. List and define the four major types of firms in the U.S.; describe major characteristics of each type, including the means for distributing income to owners. 2. Distinguish between limited and unlimited liability, and list firm types that are subject to each type of liability. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 6
  7. 7. THE CORPORATION SPECIFIC CONTENT OBJECTIVES 3. Understand the difference between a Public and a Private Company. 4. Understand the difference between a Primary and a Secondary Market. 5. Discuss the division of corporate ownership into shares of stock. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 7
  8. 8. THE CORPORATION THE FOUR TYPES OF FIRMS • Sole Proprietorship • Partnership • Limited Liability Company (LLC) • Corporation (Corp.) FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 8
  9. 9. THE CORPORATION THE FOUR TYPES OF FIRMS Video: Types of Businesses http://www.youtube.com/watch?v=gQkjdbHqGaQ Activity: Scaffolding activity (groups of 3 students) using a Chart/Matrix diagram to describe the business characteristics, similarities, and differences. You all have 10’; then you will teach each other. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 9
  10. 10. THE CORPORATION THE FOUR TYPES OF FIRMS AS OF 2013 IN THE U.S. Source: www.bizstats.com FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 10
  11. 11. THE CORPORATION THE FOUR TYPES OF FIRMS (CONT.) Sole Proprietorship • Business is owned and run by one person • Typically has few, if any, employees • Advantages Easy to create • Disadvantages Unlimited personal liability Limited life FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 11
  12. 12. THE CORPORATION THE FOUR TYPES OF FIRMS (CONT.) Partnership • Similar to a sole proprietorship, but with more than one owner • All partners are personally liable for all of the firm’s debts. A lender can require any partner to repay all of the firm’s outstanding debts. • The partnership ends with the death or withdrawal of any single partner. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 12
  13. 13. THE CORPORATION THE FOUR TYPES OF FIRMS (CONT.) Limited Liability Company (LLC) • All owners have limited liability but they can also run the business. • Relatively new business form in the U.S. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 13
  14. 14. THE CORPORATION THE FOUR TYPES OF FIRMS (CONT.) Corporation A legal entity separate from its owners. • Has many of the legal powers individuals have such as the ability to enter into contracts, own assets, and borrow money. • The corporation is solely responsible for its own obligations. Its owners are not liable for any obligation the corporation enters into.FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 14
  15. 15. THE CORPORATION THE FOUR TYPES OF FIRMS (CONT.) Corporation Ownership. • Represented by shares of stock. • Owner of stock is called: Shareholder; Stockholder; or Equity Holder. • Sum of all ownership value is called equity. • Owner is entitled to dividend payments. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 15
  16. 16. THE CORPORATION Ownership versus Control of Corporations Financial Manager Responsible for: • Investment Decisions • Financing Decisions • Cash Management FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 16
  17. 17. THE CORPORATION Ownership versus Control of Corporations Financial Manager Activity: Scaffolding activity (groups of 3 students) using the 5 W’s diagram. Article: “Ten tips for leading companies out of crisis,” (Yakola, 2014). http://www.mckinsey.com/insights/corporate_finance/ten_tips_for_leading_companies_ou t_of_crisis In groups, analyze the Five W's (Who, When, Where, What, and Why) to evaluate this paper. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 17
  18. 18. THE CORPORATION Ownership versus Control of Corporations Goal of the Firm Shareholders will agree that they are better off if management makes decisions that maximizes the value of their shares. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 18
  19. 19. THE CORPORATION The Stock Market • Public Company Stock is traded by the public on a stock exchange. • Private Company Stock may be traded privately.FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 19
  20. 20. THE CORPORATION The Stock Market (cont.) • Primary Markets When a corporation itself issues new shares of stock and sells them to investors, they do so on the primary market. • Secondary Markets After the initial transaction in the primary market, the shares continue to trade in a secondary market between investors. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 20
  21. 21. THE CORPORATION The Stock Market (cont.) Video: Types of Common Stock http://www.youtube.com/watch?v=Hca0PMDv6WA Activity: use a Y-Chart diagram to analyze and describe, with respect of 3 variables, a Common Stock. FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 21
  22. 22. THE CORPORATION The Stock Market (cont.) Largest Stock Markets (Volume of shares and Value of domestic corporations) • New York Stock Exchange (NYSE) Market Makers/Specialists Each stock has only one market maker • NASDAQ Does not meet in a physical location May have many market makers for a single stock • London Stock Exchange and Tokyo Stock Exchange FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 22
  23. 23. THE CORPORATION Worldwide Stock Markets Ranked by Two Common Measures as of 2013 Source: www.world-exchanges.org FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 23
  24. 24. THE CORPORATION Vocabulary • NASDAQ • NYSE • CEO-Chief Financial Officer • Partnership • Primary Market • Private Companies • Public Companies FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 24
  25. 25. THE CORPORATION Vocabulary • “S” corporation • Secondary Market • Shareholder • Sole proprietorship • Stock • Stock Market (or Stock Exchange) • Stockholder FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 25
  26. 26. THE CORPORATION Q & A FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 26
  27. 27. THE CORPORATION Assessment - Chapter Quiz 1. What are the four types of firms? 2. What type of firm generates most revenue in the United States? 3. What are the advantages and disadvantages of a Sole Proprietorship? 4. What is the number 1 stock market based on total volume of transactions worldwide? 5. What is the number 1 stock market based on total value of transactions worldwide? 6. Multiple choice questions 7. T – F questions FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 27
  28. 28. THE CORPORATION References Berk, J. & DeMarzo, P. (2014). Corporate Finance: The Core. 3rd ed. Boston, MA: Pearson Prentice Hall. ISBN: 978-0-13-299247-3 Enchanted Learning.com. (2003). Graphic Organizers. Retrieved from http://www.enchantedlearning.com/graphicorganizers The Brandow Company. (2012). The Four Types of Firms. Retrieved from www.bizstats.com Yakola, D. (2014). Ten tips for leading companies out of crisis. Retrieved from http://www.mckinsey.com/insights/corporate_finance/ten_tips_for_leadi ng_companies_out_of_crisis World Federation of Exchanges. (2014). Worldwide Stock Markets Ranked by Two Common Measures. Retrieved from www.world- exchanges.org/statistics FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 28
  29. 29. THE CORPORATION Thank you all and I will see you on our next class! FTC Pembroke Pines - Corporate Finance - Manuel Christiansen, MBA 29

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