
•Finance is the study of money management and the process of acquiring needed funds. Finance also encompasses the oversight, creation, and study of money, banking, credit, investments, assets, and liabilities that make up financial systems.
•Financial management is defined as those business activities undertaken with the goal of maximizing shareholder wealth, utilizing the principles of the time value of money, leverage, diversification and an investment's expected rate of return versus its risk.
Many investment projects have the following characteristics:
•The project involves the purchase of an asset with an expected life of several years and involves the payment of a large sum of money at the beginning of the project. Returns on the investment consist largely of net income from additional profits over the course of the project’s life.
•The asset might also have a disposal value at the end of its useful life.
•A capital project might also need investment in working capital. Working capital also involves an investment of cash.
•Alternatively a capital investment project might involve the purchase of another business, or setting up a new business venture.
•These projects involve an initial capital outlay, and possibly some working capital investment. Financial returns from the investment might be expected over a long period of time, perhaps indefinitely.
Financial statements are written records that convey the business activities and the financial performance of a company. Financial statements are often audited by government agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing purposes.
•The cost of capital for investors is the return that investors require from their investment. Companies must be able to make a sufficient return from their own capital investments to pay the returns required by their shareholders and holders of debt capital.
•The cost of capital for investors therefore establishes a cost of capital for companies.
•Ratios help us evaluate financial statements. We calculate many different ratios, with different ones used to examine different aspects of the firm’s operations.
•You will get to know some ratios by name, but it’s better to understand what they are designed to do than to memorize names and equations.
In business, financial management is the practice of handling a company's finances in a way that allows it to be successful and compliant with regulations. That takes both a high-level plan and boots-on-the-ground execution.
In this course, you will learn the basic concepts of financial management that will allow you to understand the fundamental concepts behind this subject.
In the end of this course, you will be able to understand:
· Finance Versus Economics and Accounting
· Finance within an Organization
· Corporate Finance, Capital Markets, and Investments
· Forms of Business Organization
· Stock Prices and Shareholder Value
· Conflicts Between Managers, Stockholders, and Bondholders
· Managers versus Stockholders
· Financial Statements and Reports
· The Balance Sheet
· Allied’s Balance Sheet
· The Income Statement
· Statement of Cash Flows
· Massaging the Cash Flow Statement
· Statement of Stockholders’ Equity
· Financial Analysis on the Internet
· Free Cash & its importance for Small business
· Income Taxes
· Individual Taxes
· Corporate Taxes
· Ratio Analysis
· Liquidity Ratios
· Current Ratio
· Quick, or Acid Test, Ratio
· Asset Management Ratios
· Inventory Turnover Ratio
· Days Sales Outstanding\
· Fixed Assets Turnover Ratio
· Total Assets Turnover Ratio
· Debt Management Ratios
· Total Debt to Total Assets
· Times-Interest-Earned Ratio
· Profitability Ratios
· Operating Margin
· Profit Margin
· Global Perspectives: Global Accounting Standards:
· Return on Total Assets
· Time Lines
· Future Values
· Step-by-Step Approach
· Simple versus Compound Interest
· Present Values
· Finding the Interest Rate, I
· Finding the Number of Years, N
· Annuities
· Future Value of an Ordinary Annuity
· Future Value of an Annuity Due
· Present Value of an Ordinary Annuity
· Finding Annuity Payments, Periods, and Interest Rates
· Finding Annuity Payments, PMT
· Finding the Number of Periods, N
· Finding the Interest Rate, I
· Uneven Cash Flows
· Future Value of an Uneven Cash Flow Stream
· Comparing Interest Rates
· Fractional Time Periods
· Amortized Loans