Finanças
Sept 19, 2006
Topics
Practical information about this course
 What is this course about?
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About the Course
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Objective: to introduce basic principles of finance and
practical tools for financial decisions.
Language: English
Text book: Corporate Finance, Ross, Westerfield and
Jaffe, 7th edition
Syllabus and notes online:
http://docentes.fe.unl.pt/~qdai/teaching/finance_I.htm
Password: finance
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Webpage of exercise seminars:
http://docentes.fe.unl.pt/~dpm/
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Office hour: Thursday 13-15, MBA building room 302.
Email: qinglei.dai@fe.unl.pt
Evaluation
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Mid-term exam: November 14 (optional, 25%)
Case study:
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3-4 students per group.
The groups have to be registered by October 3rd with
the teaching assistants. Anyone who fails to register has
to do the case study by himself.
Three case study reports (8% each): due on Oct 26, Nov
21 and Dec 7.
Final exam
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Jan 17
Feb 2
What is this course about?
The firm
 What do we learn from this course?
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The role of a financial manager
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The balance sheet model of corporate finance
What is a financial manager
The role
Business organization
Introduction to the Firm
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Purpose of the firm: value creation
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Does value maximization justify unethical
behavior
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Two aspects of corporate finance:
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Enron
WorldCom
Raise funding
Investment
Balance sheet model of corporate finance
Balance sheet model
Current Assets
Short-term liabilities
Inventory, raw material, cash
Loans and other obligations that
have to be paid in within one
year
Fixed Assets
Tangible assets: buildings,
machinery
Intangible assets: patent,
trademark
Long-term liabilities
Equity
Residual claim on the debt
Capital Structure: V=B+S
Capital budegting
decision, a.k.a.
Investment decision
Financing decision:
raising funds for
investments & operation
Balance sheet model
Current Assets
Short-term liabilities
Inventory, raw material, cash
Loans and other obligations that
have to be paid in within one
year
Long-term liabilities
Fixed Assets
Tangible assets: buildings,
machinery
Intangible assets: patent,
trademark
Equity
Residual claim on the debt
Net working capital
Operating cash flow management
Who is The Financial Manager?
Chief Financial Officer
Treasurer
Cash management,
raising funds, bank
relationships
Financial
policy and
planning
Controller
Taxes, accounting, and
financial reporting
The Role of The Financial Manager
(2)
Firm's
operations
Real assets
(1)
Financial
Manager
(4a)
(4b)
(3)
(1) Cash raised from investors
(2) Cash invested in firm
(3) Cash generated by operations
(4a) Cash reinvested
(4b) Cash returned to investors
Investors
Business Organization
Sole proprietorship
 Partnership
 Corporation
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Business Organization
Sole
Partnership
Proprietorship
Corporation
Who owns the
business?
The manager
Partners
Shareholders
Are managers
and owners
separate?
What is the
owner’s
liability?
Are the owner
& business
taxed
separately?
No
No
Usually
Unlimited
Unlimited
Limited
No
No
Yes