Escolar Documentos
Profissional Documentos
Cultura Documentos
Week 1: Chapter 1
September 11, 2015
Introduction
Syllabus
expectations
cuLearn
Lab / TA
Chapter 1
Legal Forms of Business Organizations
Role of Financial Managements
Markets
1-2
Announcements / Agenda
1-3
Class Composition
BUSI-2504 B
Class Composition
At September 10, 2015
Tota
Degree U1 U2 U3 U4
ls
(BIB) 0 3 1 1 5
(BA HON) 0 0 2 0 2
(BCOMM) 0 72 13 2 87
(BMATH) 0 0 1 0 1
Totals 0 75 17 3 95
1-4
Class Composition
B.Comm Students by Program
Accounting & Finance 1
Bachelor of Commerce 13
Management 4
Supply Chain Mgmt 4
Accounting 35
Finance 21
Intern'l Business 3
Marketing 4
1-5
Legal Forms of Business
Organizations
1. Sole Proprietorship
2. Partnership
3. Corporation
1-6
Sole Proprietorship
Disadvantages
Advantages
Unlimited liability
Easiest to start
Limited to life of
Least regulated
owner
Single owner
Equity capital limited
keeps all the
to owners personal
profits
wealth
Taxed once as
Difficult to sell
personal income
ownership interest
1-7
Partnership
Advantages Disadvantages
1-9
Goal Of Financial Management
What should be the goal of a
corporation?
Maximize profit (short term or long
term)?
Minimize costs?
Maximize market share?
Maximize the current value of the
companys stock?
Does this mean we should do
anything and everything to
1 - 10
Toronto Maple Leafs
Has not won the Stanley Cup since
1968
Out of the Play-offs for most of the
past several years
But it is the most valuable team in
the NHL
Revenues (Attendance, Merchandise)
Profitability
Worth Approximately $1 Billion USD
Owned by Bell and Rogers
Almost irrelevant their success on 1 - 11
Financial Managers
Managerial compensation
Incentives can be used to align
management and stockholder interests
The incentives need to be structured
carefully to make sure that they achieve
their goal
Corporate control
Controls in place to ensure Managers act in
the best interested of the shareholders
Conflicts with other stakeholders
1 - 12
Primary Goals of Financial
Management
Three goals of financial management:
1. Maximize shareholder wealth
2. Maximize share price
3. Maximize firm value
1 - 13
The Agency Problem
Agency relationship
Stockholders (principals) hire managers
(agents) to run the company on their behalf
Agency problem
Agent has more information than the
principal
principal cannot directly ensure that its agent
is always acting in the principal's best
interests
Conflicts of interest can exist between the
principal and the agent
1 - 14
Markets
1. Markets
2. Money Markets
3. Capital Markets
A. Primary Markets
B. Secondary
4. Financial Institutions
1 - 15
Money Markets
1 - 19
Financial Institutions
Financial institutions act as
intermediaries between suppliers and
users of funds