BAF 311
CHAPTER ONE : INTRODUCTION TO CORPORATE FINANCE
Corporate finance addresses several important questions:
1. What long-term investments should the firm take on? (Capital budgeting)
2. Where will we get the long-term financing to pay for the investment? (Capital
structure)
3. How will we manage the everyday financial activities of the firm? (Working
capital)
Financial Manager
The Chief Financial Officer (CFO) or Vice-President of Finance coordinates the activities of the treasurer
and the controller.
The controller handles cost and financial accounting, taxes, and information systems.
The treasurer handles cash management, financial planning, and capital expenditures.
Financial Management Decisions
The financial manager is concerned with three primary categories of financial decisions.
1. Capital budgeting – process of planning and managing a firm’s investments in
