FIN 300 Lecture Notes - Lecture 1: Matching Principle, Retained Earnings, Operating Cash Flow
31 Oct 2016
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Document Summary
What is finance: mathematical reasoning + $, combination of logic, mathematics, economics and accounting, subfields of finance: corporate finance, investments, personal finance, financial markets, real estate finance, finance is indispensable in everyday life. No, because : default risk: you may not get it back, opportunity cost: you are not asking for interest, no gain for you, currency difference: currency can drop. Inflation risk: that same amount won"t be worth as much later. Time value of money today does not equal tomorrow. Application: valuation of stock and bond, calculation of pension and mortgage and making capital investment decisions. What long-term investments should you take on: capital budgeting (e. g. apple developed iphone, google purchased motorola) Where will you get the long-term financing to pay for your investment: capital structure (e. g. ipos, seasoned equity offerings, bank debts) How will you manage day-to-day financial activities: working capital management (e. g. collecting from customers, paying suppliers) Others: limited partnerships and limited liability partnerships.
