BFA503 Workshop 1 Topic One
BFA503 Workshop 1 Topic One
BFA503 Workshop 1 Topic One
Remaining cash
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The role of the financial manager
It is all about cash flows
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The role of the financial manager
Three fundamental decisions in financial management
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• Weaknesses of the basic legal forms of business
organisation
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Managing the financial function
External auditors
Provide an independent annual audit of the
firm’s financial statements.
Ensure that the financial numbers are
reasonably accurate, and accounting
principles have been consistently applied
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Company organisation chart
Workshop Participation
Part 2
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The goal of the company
What should management maximise?
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The goal of the company
Maximise the value of the company’s share price
When analysts and investors determine the value of
a company’s share price, they consider
The size of the expected cash flows
The timing of the cash flows
The riskiness of the cash flows.
The mechanism for determining share prices are
based predominately on cash-flows from correct
and well executed business decisions
YES!!!
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Agency conflicts:
separation of ownership and control
Ownership and control
Agency conflicts:
separation of ownership and control
Agency relationships
An agency relationships arises whenever one
party, called the principal, hires another
party, called the agent
Agency conflicts:
separation of ownership and control
Do managers really want to maximise share price?
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Agency conflicts:
separation of ownership and control
Aligning the interests of management and shareholders
Management Compensation
a significant portion of management
compensation is tied to firm performance
(e.g. share price)
Agency conflicts:
separation of ownership and control
Aligning the interests of management and shareholders
Agency conflicts:
separation of ownership and control
Aligning the interests of management and shareholders
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The importance of ethics in business
Business Ethics
• A society’s ideas about what actions are
right and wrong.
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Conflicts of Interest
conflict between individual’s personal or
institutional gain and the obligation to serve
the interest of another party.
Information Asymmetry
one party in a transaction has information
that is unavailable to the other parties
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The importance of ethics in business
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Workshop Participation
Web pages
• http://www.asx.com.au/
• http://www.companydirectors.c
om.au/
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Copyright notice
Copyright © 2018
University of Tasmania, TSBE
All rights reserved.
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