ABSTRACT
In the past, the finance area enjoyed its own “ivory tower”—much like research and development groups did and still do. Today, with increasing costs and increasing opportunities, all department managers should be aware of the principles necessary to run departments effectively and be able to provide accurate cost and expense information to financial managers of the company. This discipline is often called managerial finance. The topics that will be covered are:
Management’s primary goal• Depreciation• Debt and equity, interest and dividends• Time value of money (most important concept in finance)•
Present value − Future value −
Bond valuation• Stock valuation• Expected value• Economies of scale and diminishing returns• Financial statements•
Profit and loss statement, income statement − Balance sheet −
Retained earnings• Ratio analysis• Capital budgeting•
Payback period − Net Present Value − Internal rate of return −
Cash flow analysis• Operating leverage• Risk and rates of return•
We now venture into the world of finance. Many of the issues we will discuss will apply to decisions that you make every day in your life. In business, these issues are simply on a larger monetary scale and apply to your company.
