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Corporate Finance: Summary lectures + example questions
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Corporate FinanceLecture 1, 05-09-2022
Accounting, Finance and Forecasts
Financial decision making is all about the future
Finance → future → that’s why Tesla is worth so much even though they don’t sell many cars
Example: Brand value Coca Cola
- Accounting: worth 7 billion dollar on the books
- Finance: in the market worth 70-80 billion dollar
➔ So, in finance we need to forecast…, but how good are we at forecasting?
Corporate Finance and the Financial Manager
What is Corporate Finance?
Liquid → company can run
,The Financial Manager (CFO)
→ tasks financial manager
Waar staat de financial manager in het bedrijf?
The Goal of Financial Management
Financial Goals
Most important = profitability. Maximize shareholder value.
Security and independence are nice to have, but not the most
important.
,Financial Markets and the Corporation
How Cash flows…
Company is not isolated, but connected to the real world
Primary vs. Secondary Markets
Primary → bedrijf verkoopt aandelen direct aan investeerder. Bedrijf verkoopt share voor het eerst.
Secondary → je koopt aandeel van een andere investeerder (bijv. online).
, Chapter 3
The Annual Report
The Statement of Financial Position (Balance Sheet)
Net working capital = current assets – current liabilities.
- Je moet dus meer current assets dan current liabilities hebben om op korte termijn schulden
te kunnen betalen met je assets.
- It is important to ensure that net working capital is positive
- Positive net working capital means that enough cash will be available to pay off liabilities
arising
Example:
Market Value versus Book Value
- Book value based on Accounting Figures drawn from Accounting Standards
- Market value based on prices or market valuations
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