FINE 2000 Final: Finance Final Exam Notes.docx
Document Summary
The financial manager has to determine what capital investment projects to invest in (capital budgeting decision) and how to pay for those assets (financing decision) Choosing between two broad categories of external financing (debt or equity) are capital structure decisions. Treasurer: looks after cash, raising new capital and relationships with stakeholders; controller: prepares financial statements, manage internal accounting and looks after tax affairs. Another term for cash flow from assets is free cash flow because it is the cash available to pay out bond and share holders. Cf from assets = cf used in financing + change in cash in the bank. Cf from assets = cash flow to creditors + cash flow to stockholders + increase in cash. Cf from assets = operating cash flow net capital spending additions to non cash nwc. Operating cash flow = net income + depreciation + interest. Net fixed assets beg net fixed assets + depreciation.