1. Finanças Sept 19, 2006

2. Topics  Practical information about this course  What is this course about?

3. About the Course  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  Webpage of exercise seminars: http://docentes.fe.unl.pt/~dpm/  Office hour: Thursday 13-15, MBA building room 302.  Email: qinglei.dai@fe.unl.pt

4. Evaluation  Mid-term exam: November 14 (optional, 25%)  Case study: 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 Jan 17 Feb 2

5. What is this course about?  The firm  What do we learn from this course? The balance sheet model of corporate finance  The role of a financial manager What is a financial manager The role  Business organization

6. Introduction to the Firm  Purpose of the firm: value creation Does value maximization justify unethical behavior  Enron  WorldCom  Two aspects of corporate finance: Raise funding Investment  Balance sheet model of corporate finance

7. Balance sheet model Current Assets Inventory, raw material, cash Fixed Assets Tangible assets: buildings, machinery Intangible assets: patent, trademark Short-term liabilities Loans and other obligations that have to be paid in within one year 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

8. Balance sheet model Current Assets Inventory, raw material, cash Fixed Assets Tangible assets: buildings, machinery Intangible assets: patent, trademark Short-term liabilities Loans and other obligations that have to be paid in within one year Long-term liabilities Equity Residual claim on the debt Operating cash flow management Net working capital

9. Who is The Financial Manager? Chief Financial Officer TreasurerController Financial policy and planning Cash management, raising funds, bank relationships Taxes, accounting, and financial reporting

10. Financial Manager Firm's operations Investors (1) Cash raised from investors (1) (2) Cash invested in firm (2) (3) Cash generated by operations (3) (4a) Cash reinvested (4a) (4b) Cash returned to investors (4b) The Role of The Financial Manager Real assets

11. Business Organization  Sole proprietorship  Partnership  Corporation

12. Business Organization