Fin 4300 Spring 2011

In: Business and Management

Submitted By ttheky
Words 35989
Pages 144
Finance 4300: Corporate Finance

Dr. Pan College of Business and Economics California State University, East Bay

Spring 2011

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FIN 4300 Topic 1: Introduction to Corporate Financing

1.1 What Is Corporate Finance 1.2 Types of securities issued by corporations (1) Common Stock (2) Preferred Stock (3) Corporate Debt 1.3 Venture Capital, IPOs, and Seasoned Offerings

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What Is Corporate Finance?

Corporate finance can be broken down into: (1) the investment (or capital budgeting) decision; and (2) the financing decision. The firm has to decide (1) how much to invest and which real assets to invest in and (2) how to raise the necessary cash.
Balance Sheet
The balance sheet presents the accounting value of assets and the source of money used to purchase those assets at a particular time. Current Assets Cash & Marketable Securities Receivables Inventories Fixed Assets Plant & Equipments Less accumulated depreciation

Current Liabilities Long‐Term Debt Shareholders' equity

Total assets = Total liabilities & Equity

Income Statement
The income statement is a financial statement listing the revenues, expenses, and net income of the firm in a period of time.
Net sales (Cost of goods sold) (Selling, general & administrative expenses) (Depreciation) Earnings before interest & taxes (Interest Expenses) Taxable Income (Taxes) Net Income (Dividends) Retained Earnings

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Corporate Financing

In the following two chapters (14 and 15), we assume that the firm has already decided on which investment projects to accept, and we focus on the best way to finance these projects. Managers want to raise money at the lowest possible cost, but their ability to find cheap financing is limited by the intense competition between investors. As a result of this competition,…...

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