asset valuation

companies are lways searching for assets that are worth more to them than the holders.
opportunity cost of capital allows one to work for a future return on investment.
fundamental objective of corporate finance: maximizing the current market value of the firm's outstanding shares.
this objective for instance overrides objectives like maximizing profits
PV = discount factor * C1

financial manager overview

overall task of a financial manager:
(1) the investment or capital budgeting, decision and
(2) the financial decision.

i.e.

(1) what real assets to buy and
(2) how to raise the cash

Banks .. Money inflow

When banks end money to the firm, they insist on a formal contract stating the rate of interest and repayment dates, perhaps placing restrictions on dividends or additional borrowing. But you can't devise written rules to cover every possible future event. So written contracts are incomplete and need to be supplemented by understandings and by arrangements that help to align the interests of the various parties.

Definitions

Not all businesses are corporations. Small ventures can be owned and managed by a single individual. They are called sole proprietorships. In other cases several people may join to form a partnership.
a public company is one whose shared are held not only by a small group of investors but a large body of the workforce too. Although stockholders own a corporation they do not manage it. Instead they vote to elect a board of directors. the board appoints top management and is supposed to ensure that they act in the company's interests. the separation of ownership and management gives corporations permanence.
corporations have limited liability.

definitive post

In this blog we will go through a course in corporate finance.