Presentatsioon Corporate Financial Management (0)

Corporate Financial Management Glen Arnold
Book Review Introduction Reading this book you will receive a brief overview of the financial world and its components . This review considers the most fundamental question facing anyone trying to make decisions within an organization ­ what is the objective of the business? Without clarity on this point it is very difficult to run a business in a purposeful and effective manner . In addition , a brief rundown is given of both primitive and modern economies and the role of the financial manager within an organization. The objective of the firm When people have to make choices in the harsh environment in which modern businesses have to operate, it is necessary to be clear about the purpose of the organization; to be clear about what objective is set for management to achieve. It is imperative that the management teams are aware of, respect and contribute to the fundamental objective of the firm; otherwise the function of the company will become random and rudderless. Some possible objectives Achieving a target market share ­ In some industrial sectors to Survival ­ achieve a high share of the Creating an everexpanding empire ­ market gives high rewards. There are circumstances where the overriding objective becomes the survival of the firm. This is an objective which is rarely openly discussed, but it seems reasonable to propose that some managers drive a firm forward , via organic growth or mergers, because of a desire to run an everlasting enterprise. Primitive and modern economies A simple economy In this economy there is no money and therefore there are two choices open to the household sector upon receipt of the goods and services : consumption or investment. For instance : a worker takes payment in the form of a plough so that in the future years when he enters the business sector he can produce more food per acre. The introduction of money In order to simplify the exchange of goods and services between different households, a tool is needed, into which all products can be converted. That tool should be small and portable , it would have to hold its value over a long period of time and have general acceptability. The introduction of money into the system creates monetary as well as real flows of goods and services. Investment in a money economy Investment involves resources being laid aside now to produce a return in the future, for instance, today´s consumption is reduced in order to put resources into building a factory and the creation of machine tools to produce goods in later years. In a modern, sophisticated economy there are largescale flows of investment resources from the ultimate owners (individuals who make up households) to the business sector. Even the profits of previous year ´s endeavours retained within the business belong to households ­ they have merely permitted firms to hold on to those resources for further investments on their behalf. The role of the financial manager Strategy To be able to carry on a business a Managers need to formulate and implement long company needs real assets . term plans to maximize shareholder wealth . To obtain these real assets corporations This means selecting markets and activities in which the firm, given its resources, has a sell financial claims to raise money; to competitive edge . lenders a bundle of rights are sold within a Managers need to distinguish between those loan contract, to shareholders rights over products or markets that generate value for the the ownership of a company are sold as firm and those that destroy value. well as the right to receive a proportion of The financial manager has a pivotal role in this profits produced. strategic analysis . The financial manager has the task of both raising finance by selling financial claims and advising on the use of those funds within the business. Summary The financial world is very complicated and in order to understand the meaning and purpose of different institutions , previous homework is vital. In addition, is is necessary to have a clear understanding of the financial system and its place in the economy: whether we are dealing with a simple economy where financial services are lacking or a modern one with banks, financial markets and investment firms. Also, we learned that one of the most important jobs within an enterprise is that of the financial manager, as it is he/she that is responsible for the firm´s financial wellbeing. To sum up, this book has a lot of useful information to offer and is very reader friendly . The End Thank you for listening !
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