英文财务管理的概念

财务管理的概念：

Concerns the acquisition, financing, and management of assets with some overall goal in mind.

Investment decisions，Financing decisions，Asset management decisions。

The Goal of the Firm：

Maximization of Shareholder Wealth：Value creation occurs when we maximize the share price for current shareholders.

公司组织形式：

Sole Proprietorships：Advantages：Simplicity，Low setup cost，Quick set up，Single tax filing on individual form。Disadvantages：Unlimited liability，Hard to raise additional capital，Transfer of ownership difficulties，

Partnerships (general and limited) Advantages：Can be simple，Low setup cost, higher than sole proprietorship，Relatively quick setup，Limited liability for limited partners。Disadvantages：Unlimited liability for the general partner，Difficult to raise additional capital, but easier than sole proprietorship，Transfer of ownership difficulties

Corporations ：Advantages：Limited liability，Easy transfer of ownership，Unlimited life，Easier to raise large quantities of capital。Disadvantages：Double

taxation，More difficult to establish ，More expensive to set up and maintain。

5c系统：Five Cs of Credit

1 Character – willingness to meet financial obligations

2 Capacity – ability to meet financial obligations out of operating cash flows

3 Capital – financial reserves（储备）

4 Collateral – assets pledged as security

5 Conditions – general economic conditions related to customer’s business

PBP的优缺点：

Strengths: 1 Easy to use and understand

2Can be used as a measure of liquidity

3Easier to forecast ST than LT flows

Weaknesses:

1Does not account for TVM

2Does not consider cash flows beyond the PBP

3Cutoff period is subjective

Irr的优缺点：

Strengths:

1Accounts for TVM

2Considers all cash flows

3 Less subjectivity

Weaknesses: 1 Assumes all cash flows reinvested at the IRR

2Difficulties with project rankings and Multiple IRRs

Npv的优缺点：

Strengths:

1Cash flows assumed to be reinvested at the hurdle rate.

2Accounts for TVM.

3Considers all cash flows.

Weaknesses:May not include managerial options embedded PI的优缺点：

Strengths:

1Same as NPV

2Allows comparison of different scale projects

Weaknesses: 1Same as NPV

2Provides only relative profitability

3Potential Ranking Problems

风险与报酬：

in the project

Risk: The variability of returns from those that are expected.

Systematic Risk is the variability of return on stocks or portfolios associated with changes in return on the market as a whole.

Risk factors that affect a large number of assets,Also known as non-diversifiable risk or market risk,Includes such things as changes in GDP, inflation, interest rates, etc.

Unsystematic Risk is the variability of return on stocks or portfolios not explained by general market movements. It is avoidable through diversification.

Risk factors that affect a limited number of assets,Also known as unique risk and asset-specific risk,Includes such things as labor strikes, part shortages, etc.

Return:Income received on an investment plus any change in market price, usually expressed as a percent of the beginning market price of the investment.

1There is a reward for bearing risk 2The greater the potential reward, the greater the risk 3This is called the risk-return trade-off.

Systematic Risk Principle:

There is a reward for bearing risk;There is not a reward for bearing risk unnecessarily;The expected return on a risky asset depends only on that asset’s systematic risk since unsystematic risk can be diversified away.

Motives for Holding Cash

1Transactions Motive -- to meet payments arising in the ordinary course of business

2 Speculative Motive-- to take advantage of temporary opportunities

3 Precautionary Motive-- to maintain a cushion or buffer to meet unexpected cash needs

Variables in Marketable Securities Selection

1. Interest Rate (or Yield) Risk：The variability in the market price of a security caused by changes in interest rates.

2 Maturity：Refers to the remaining life of the security.

3 Safety：Refers to the likelihood of getting back the same number of dollars you originally invested (principal).

4 Marketability (or Liquidity)：The ability to sell a significant volume of securities in a short period of time in the secondary market without significant price concession.