BUS 1 Lecture Notes - Lecture 1: Financial Plan, Financial Statement, Cash Management
Document Summary
To make money, company must spend money --> inventory, supplies, equipment, facilities, employee wages. Financial management - managing firm"s money to meet goals. Accountant main function to collect and present financial. Financial manager financial statements prepared by accountants to make financial decisions: fm focuses on cash flows - inflows and outflows of cash. Analyze financial data prepared by accountants, monitor firm"s financial status, prepare plans. Main goal is to maximize value of firm to its owners: value of public corp measured by share price of stocks, private company value -> cost at which it could be sold. To maximize value, fm has to consider short and long term consequences. Risk-return trade-off - the higher the risk, the greater the return. To grow & prosper, firm must keep investing 18250 in its operations. Fm decides best way to use firm"s $: short term expenses supports day-to-day activities, long term for fixed assets (build factory, buy manufacturing equipment)
