Chapter one
Introduction to Corporate Finance
Financial Management
Course Lecture 1
Outline
What is Corporate Finance?
The Corporate Firm
The Importance of Cash Flow
The Goal of Financial Management.
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1. What is Corporate Finance?

Corporate Finance addresses the following three questions:
1. What long-term investments should the firm choose? (capital
budgeting,資本預算)
2. How should the firm raise funds for the selected investments?
(capital structure,資本結構)
3. How should short-term assets be managed and financed?
(net working capital management,淨營運資金管理)
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Framework of Corporate Finance
Capital
Budgeting
Cognition of Returns and Risks
Capital Investment Decision
Short-term
financial markets
Long-term
financial markets
Short-Term Finance
Long-Term Finance
Debt Finance
Corporate Debt
Capital
Structure
Leasing
Convertible Bond
…
Equity Finance
Stocks
Options
Cash management
Dividend
Policy
Warrant…
Interest Conflict – Agency Problems
Solutions – Corporate Government, M&A…
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公司理財架構
•
•
•
•
公司理財的左右手：
– 投資決策與融資決策
投資決策延伸之問題：
– 如何決定哪些是「好的」投資專案？(資本預算決策)
– 投資是為了追求報酬但必定有風險！(風險與報酬之評估)
融資決策延伸之問題：
– 如何用最低成本找到足夠的錢進行投資？ (資本預算決策)
– 長期融資工具有哪些？(股票﹑債券和衍生性商品市場；在使用融資方式時，
風險與報酬之評估於公司的角度而言反而變成出資者的要求報酬與其願意承
擔之風險評估)
– 短期融資工具有哪些？(淨營運資金管理)
– 出資者與公司之間的關係如何維護？(股利政策；代理問題；公司治理)
另外，一定要記得，金融市場的存在，就是要讓資金需求與供給者有一平台可交
易，在公司理財的範疇中，永遠記得資金需求者為公司，資金供給者為出資者(或
在交易面稱為投資人)，這兩類人對風險和報酬的看法是不同的(效率市場假說)，
對資金需求者而言，風險即為他投資新計畫的風險，可以轉嫁給資金供給者承擔，
因此報酬對資金需求者而言反而變成資金供給者的要求報酬率，以此類推，資金
供給者就是我們比較熟悉的面向，若要我承擔越多風險出資於該公司，就必須給
我更高的報酬率當作補償，這才是學財務最重要的根本{天下沒有白吃的午餐}！
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Balance Sheet Model of the Firm
Current
Liabilities
Current Assets
Net Working
Capital
Fixed Assets
1 Tangible
2 Intangible
Long-Term
Debt
How should the firm
raise funds for the
selected investments?
What long-term
investments
should the firm
choose?
Shareholders’
Equity
學習T字表(資產負債表)，往後常常會用到！
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Hypothetical Organization Chart
Board of
Directors董
事會
Chief
Executive
Officer (CEO)
專業經理人
Chief
Operation
Officer (COO)
執行長
Chief
Financial
Officer (CFO)
財務長
Treasurer 財
務主管
Cash
Manager
Credit
Manager
大型上市公司一般都是財
會分流，公司治理好的公
司還會在多設立獨立超然
的”審計或稽核”部門，作
為內控的主管單位
Controller 會
計主管
Tax Manager
Cost
Accounting
Manager
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2. The Corporate Firm 公司型態
• The Sole Proprietorship (獨資)
• The Partnership (合夥)
– General Partnership (一般合夥)
– Limited Partnership (有限合夥)
• The Corporation (公司)
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A Comparison
Corporation
Partnership
Liquidity
Shares can be easily
exchanged.
Subject to substantial
restrictions
Voting Rights
Usually each share gets one
vote
Some limited partners may
have voting rights
Taxation
Double – corporate tax and
dividend tax
No tax
Reinvestment and
dividend payout
Broad latitude
All net cash flow is
distributed to partners
Liability
Limited liability
General partners may have
unlimited liability; limited
partners enjoy limited
liability
Continuity of existence
Perpetual life
Limited life
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3. The Importance of Cash Flows
Cash for securities issued by the firm (A)
Invests
Firm
in
invests
in
assets
assets
(B)
(B)
Current
Retained
cash flows (E)
Cash flow
from firm (C)
Dividends and
debt payments (F)
Taxes
assets
Fixed assets
Financial
markets
Ultimately, the firm must
be a cash-generating
activity.
Government (D)
Short-term
debt
Long-term debt
Equity shares
The cash flows from the
firm should exceed the
cash flows from the
financial markets.
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The Identification and Timing of Cash Flows
1. The identification of cash flow:
The beginning of year, firm paid cash to acquire 2,500 ounce gold for
900,000. And Sold for 1 million in the end of the year.
Accounting view of income statement
Financial view of income statement
Sales
$1,000,000
Cash inflow
Costs
900,000
Cash outflow
Profit
$ 100,000
$
0
900,000
-$900,000
2. The timing of cash flow:
The two new projects A&B as follow:
Year
A
B
1
0
4,000
2
0
4,000
3
0
4,000
4
20,000
4,000
Total
$20,000
$16,000
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4. The Goal of Financial Management
• The most common goal:
– Profit maximization.
• The goal of financial management:
– Maximize the current value per share of the existing stock.
• The more general goal:
– Maximize the market value of the existing owners’ equity.
• Good financial decisions increase the market value of the owners’
equity.
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WE WILL START TO LEARN FINANCIAL
MANAGEMENT NEXT WEEK!
KEEP WALKING AND GOOD LUCK!
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