The document discusses the goal of the firm and agency conflicts. The main financial goal of a firm is to maximize shareholder wealth by increasing share price over the long run. However, there are agency conflicts as managers may prioritize their own goals over shareholders. Steps like incentive compensation plans, the threat of takeover, and bond covenants aim to align manager and shareholder interests. Firms also consider stakeholders and act socially responsible while still pursuing the primary goal of shareholder wealth maximization.
Chapter 1 Introduction to Financial ManagementSafeer Raza
Chapter 1 of Financial Management by Van horn
Introduction to Financial management
Topics
Introduction
What is Financial Management
Investment Decision
Financing decision
Asset management Decision
Goal of the firm
Value creation or profit maximization
wealth maximization
Agency problems
Corporate Social Responsibility
Corporate governance
Organization of the financial management function
,
introduction finance
,
what is finance
,
scope/major areas of finance
,
what is business finance
,
goal for the financial manager
,
principles of finance
,
fundamental financial management decisions…
,
special partnerships
,
the functions of financial manager
,
sole proprietorship
,
key decision of a financial manager
,
partnership
,
corporations
,
agency theory
,
agency cost
Chapter 1 Introduction to Financial ManagementSafeer Raza
Chapter 1 of Financial Management by Van horn
Introduction to Financial management
Topics
Introduction
What is Financial Management
Investment Decision
Financing decision
Asset management Decision
Goal of the firm
Value creation or profit maximization
wealth maximization
Agency problems
Corporate Social Responsibility
Corporate governance
Organization of the financial management function
,
introduction finance
,
what is finance
,
scope/major areas of finance
,
what is business finance
,
goal for the financial manager
,
principles of finance
,
fundamental financial management decisions…
,
special partnerships
,
the functions of financial manager
,
sole proprietorship
,
key decision of a financial manager
,
partnership
,
corporations
,
agency theory
,
agency cost
FINANCIAL MANAGEMENT, ROLE OF FINANCIAL MANAGEMENT, IMPORTANCE OF FINANCIAL MANAGEMENT, FEATURES OF FINANCIAL MANAGEMENT, SCOPE OF FINANCIAL MANAGEMENT, FUTURE OF FINANCIAL MANAGEMENT, etc.
1 the role of managerial finance(modified 4)Ahmed Elgazzar
1-The Role of Managerial Finance(Modified 4)
2-Time value of money(modified 1)
3-Capital Budgeting(Modified 1) [Repaired]
4-Stock Valuation(modified 1)
MBA Assignments
,
introduction to financial management
,
what is financial management
,
concept of financial management
,
areas of finance
,
scope/major areas of finance
,
agency theory
,
what is an agency problem
Unit-1 INTRODUCTION TO FINANCIAL MANAGEMENT.pdfVivekAnilKumar1
This is the first unit of Financial Management in the second semester of Master of Business Administration. Here, we can collect the meaning, definition, scope, objectives, functions, importance and every concepts of Financial Management.
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
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FINANCIAL MANAGEMENT, ROLE OF FINANCIAL MANAGEMENT, IMPORTANCE OF FINANCIAL MANAGEMENT, FEATURES OF FINANCIAL MANAGEMENT, SCOPE OF FINANCIAL MANAGEMENT, FUTURE OF FINANCIAL MANAGEMENT, etc.
1 the role of managerial finance(modified 4)Ahmed Elgazzar
1-The Role of Managerial Finance(Modified 4)
2-Time value of money(modified 1)
3-Capital Budgeting(Modified 1) [Repaired]
4-Stock Valuation(modified 1)
MBA Assignments
,
introduction to financial management
,
what is financial management
,
concept of financial management
,
areas of finance
,
scope/major areas of finance
,
agency theory
,
what is an agency problem
Unit-1 INTRODUCTION TO FINANCIAL MANAGEMENT.pdfVivekAnilKumar1
This is the first unit of Financial Management in the second semester of Master of Business Administration. Here, we can collect the meaning, definition, scope, objectives, functions, importance and every concepts of Financial Management.
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
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Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
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As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
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Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
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Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
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Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
3. The science and art of managing money:
• collection of money
• utilization of money.
Finance - Definition
Science: A
systematically
organized body
of knowledge
on a particular
subject
Art: Subjects of
study primarily
concerned with
human
creativity and
social life
Definition and Scope of Finance
4. Financial Decisions
Definition and Scope of Finance
Personal
Level
•How much of earnings to
spend.
•How much to save.
•How to invest the savings.
savings.
Business
Level
•How to raise capital.
•How to invest for profit.
•Whether reinvest or
distribute profit.
5. Areas of Business Finance
Definition and Scope of Finance
Capital
Markets
6. Areas of Business Finance
Definition and Scope of Finance
Corporate
Finance
Managing
short term
assets and
liabilities
Amount,
timing, and
and
sources of
capital
Amount,
timing, and
and type of
of assets to
to acquire
7. Areas of Business Finance
Definition and Scope of Finance
Financial
Markets
Manage-
ment and
regulation
of financial
financial
institutions
Market
efficiency
and
behavioral
finance
Prices and
return of
the debt &
equity
securities
8. Areas of Business Finance
Definition and Scope of Finance
Investment
& Portfolio
Manage-
ment
Structuring
and
Managing
investment
portfolios
Identifying
the trend of
of the
financial
market
Analyzing
the values
of stocks
and bonds
9. Finance vs. Economics & Accounting
Definition and Scope of Finance
Accounting provides
information about
cash flows.
Economics provides
the notion of
valuation based on
future cash flows.
Knowledge of both accounting and
economics is needed for financial
valuation and analysis
As a discipline
Finance grew
out of
Economics &
Accounting
10. Finance vs. Economics
Definition and Scope of Finance
Financial managers must
• understand the economic framework and
• be alert to the consequences of varying levels of economic activity
and changes in economic policy.
• be able to use economic theories as guidelines for efficient business
operation.
Marginal cost–benefit analysis is the economic principle that
states that financial decisions should be made and actions taken
only when the added benefits exceed the added costs.
11. Finance vs. Accounting
Definition and Scope of Finance
The firm’s finance and accounting activities are closely-related
and generally overlap.
• In small firms accountants often carry out the finance function,
• In large firms financial analysts often help compile accounting
information.
12. Finance vs. Accounting
Definition and Scope of Finance
One major difference in perspective and emphasis between
finance and accounting is that
• accountants generally use the accrual method
• while in finance, the focus is on cash flows.
13. Finance vs. Accounting
Definition and Scope of Finance
Finance and accounting also differ with respect to decision-
making:
• Accountants devote most of their attention to
the collection of financial data, and
the presentation of financial data.
• Financial managers, on the other hand
evaluate the accounting statements,
develop additional data, and
make decisions on the basis of their assessment of the associated
returns and risks.
14. Finance – Career Scope
Definition and Scope of Finance
Financial Services
• design and delivery of advice and financial products to individuals,
businesses, and governments.
Career opportunities include:
• banking
• personal financial planning
• Investments
• real estate
• insurance
15. Finance – Career Scope
Definition and Scope of Finance
Managerial finance
• duties of the financial manager working in a business.
Financial managers administer the financial affairs of all types
of businesses—private and public, large and small, profit-seeking
and not-for-profit. Tasks include:
• developing a financial plan or budget
• extending credit to customers
• evaluating proposed large expenditures
• raising money to fund the firm’s operations.
16. Finance – Career Scope
Definition and Scope of Finance
Career Opportunities in Managerial Finance
17. Finance – Career Scope
Definition and Scope of Finance
Accounting, management, marketing, human resources – all
decisions in these areas need to be assessed against the financial
implications –
• hence students in these area needs to learn basic finance.
Finance is important to individuals regardless of their jobs –
• it improves their decision-making skills.
19. Legal Forms of Business Organization
Forms of Business Organizations
Sole proprietorship
• business owned by one person and operated for his or her own
profit.
Partnership
• business owned by two or more people and operated for profit.
Corporation
• entity created by law
• have the legal powers of an individual
it can sue and be sued,
make and be party to contracts, and
acquire property in its own name.
21. Main Financial Goal and
Agency Conflicts
Introduction to Finance
Prof. Dr. Md Mohan Uddin
22. Goal of the Firm
Main Financial Goal and Agency Conflicts
Maximize Shareholder Wealth
• only take actions that are expected to increase the share price.
23. Many companies focus on maximizing a broad range of financial
objectives, such as
• growth, earnings per share, market share.
These goals should not take precedence over the main financial
goal - create value for investors.
Main Financial Goal – Creating Value for Investors
24. Goal of the Firm: Maximize Profit?
• Profit maximization may not lead to the highest possible share price
for at least three reasons:
1. Timing is important—the receipt of funds sooner rather than later is
preferred
2. Profits do not necessarily result in cash flows available to stockholders
3. Profit maximization fails to account for risk
Which Investment is Preferred?
25. In equilibrium, a stock’s price should equal its “true” or intrinsic
value.
Intrinsic value is a long-run concept.
To the extent that investor perceptions are incorrect, a stock’s
price in the short run may deviate from its intrinsic value.
Ideally, managers should avoid actions that reduce intrinsic
value, even if those decisions increase the stock price in the
short run.
Stock Prices and Intrinsic Value
26. Managerial Actions, the Economic
Environment, Taxes, and the Political Climate
“True”
Investor
Cash Flows
“True” Risk
Stock’s Intrinsic Value
“Perceived”
Investor
Cash Flows
“Perceived”
Risk
Stock’s Market Price
Market Equilibrium:
Intrinsic Value = Stock Price
Determinants of Intrinsic Values and Stock Prices
28. Governance and Agency:
The Agency Issue
• A principal-agent relationship is an arrangement in which an
agent acts on the behalf of a principal. For example,
shareholders of a company (principals) elect management
(agents) to act on their behalf.
• Agency problems arise when managers place personal goals
ahead of the goals of shareholders.
• Agency costs arise from agency problems that are borne by
shareholders and represent a loss of shareholder wealth.
29. Managers are naturally inclined to act in their own best interests
(which are not always the same as the interest of stockholders).
But the following factors affect managerial behavior:
• Managerial compensation packages
• Direct intervention by shareholders
• The threat of firing
• The threat of takeover
Stockholder-Manager Conflicts
30. The Agency Issue:
Management Compensation Plans
• Incentive plans are management compensation plans that tie
management compensation to share price; one example involves
involves the granting of stock options.
• Performance plans tie management compensation to measures
such as EPS or growth in EPS. Performance shares and/or cash
bonuses are used as compensation under these plans.
31. The Agency Issue: The Threat of Takeover
• When a firm’s internal corporate governance structure is
unable to keep agency problems in check, it is likely that rival
managers will try to gain control of the firm.
• The threat of takeover by another firm, which believes it can
enhance the troubled firm’s value by restructuring its
management, operations, and financing, can provide a strong
source of external corporate governance.
32. Stockholders are more likely to prefer riskier projects, because
they receive more of the upside if the project succeeds. By
contrast, bondholders receive fixed payments and are more
interested in limiting risk.
Bondholders are particularly concerned about the use of
additional debt.
Bondholders attempt to protect themselves by including
covenants in bond agreements that limit the use of additional
debt and constrain managers’ actions.
Stockholder-Debtholder Conflicts
33. The primary financial goal of management is shareholder wealth
maximization, which translates to maximizing stock price.
• Value of any asset is present value of cash flow stream to owners.
• Most significant decisions are evaluated in terms of their financial
consequences.
• Stock prices change over time as conditions change and as investors
obtain new information about a company’s prospects.
Managers recognize that being socially responsible is not inconsistent
with maximizing shareholder value.
Balancing Shareholder Interests and Society Interests
34. Goal of the Firm:
What About Stakeholders?
• Stakeholders are groups such as employees, customers,
suppliers, creditors, owners, and others who have a direct
economic link to the firm.
• A firm with a stakeholder focus consciously avoids actions that
would prove detrimental to stakeholders. The goal is not to
maximize stakeholder well-being but to preserve it.
• Such a view is considered to be "socially responsible."