Professional Documents
Culture Documents
Class 1
Fahim Rehan Khan
Email: fahim@bimsedu.com
About CFS
CFS Content
Corporate Finance
Capital Investment
Process
Sources of finance
Cost of financing
Value of investment
Risk Management
Currency Risk
Examinable Topic
Beta
CAPM
Profitability Index
IRR
Convertible loan
WACC
EOQ
FRA
Hedging
Options
SWAPS/Forward/ futures
MM Propositions
Overtrading
What is Corporate
Finance?
Corporate Finance addresses the following three
questions:
1.
2.
How can the firm raise the money for the required
investments?
3.
Financial management
functions
Corporate Strategy
Long-Term
Debt
Fixed Assets
1 Tangible
2 Intangible
Shareholder
s Equity
Current
Liabilities
Current
Assets
Long-Term
Debt
Fixed Assets
1 Tangible
2 Intangible
What
long-term
investmen
ts should
the firm
engage in?
Shareholder
s Equity
Current
Liabilities
Long-Term
Debt
Shareholder
s Equity
Current
Assets
Fixed Assets
1 Tangible
2 Intangible
Net
Working
Capital
How much
short-term
cash flow
does a
company
need to pay
its bills?
Current
Liabilities
Long-Term
Debt
Shareholder
s Equity
Capital Structure
The value of the firm can
be thought of as a pie.
The goal of the manager
is to increase the size of
the pie.
The Capital Structure
decision can be viewed as
how best to slice up a the
pie.
70%
25%
50%
30%
Debt
Debt
Equity
75%
50%
Equity
Corporate Stakeholders
Agency theory
Board of Directors
Assets
Equity
Shareholders
Debt
Debt holders
Management
Effectiveness
A measure of outputs
Efficiency
Economy
i.e. , for example, not spending $2 when the same thing can be
bought for $1
System analysis
THANK YOU