Finances
Finance concept
Finance is the branch of economics that is related to the study of investment activities both in real assets and in
financial assets and their administration
Types of Assets
Real
Tangible asset, used to generate resources
Financial
It constitutes the right to collect an account.
Field of action of finance
Investments
How to make and how to manage an investment in financial assets.
Institutions and financial markets
They specialize in selling, buying, creating credit titles and securities.
Corporate finance or financial management of companies.
Physical person with business
Create wealth for the shareholder
Increasing importance of financial management
Responsibilities of the financial manager
Long-term planning and budgeting
Investment decisions and financing of capital goods and inventories
Administration of accounts receivable and cash
Coordination and control of operations
Relationship with financial markets
Evolution of finance
1920
Capital market, consolidations and mergers, liquidity and financing
1930
Defensive aspects
Bankruptcy
Liquidations
Reorganizations
1950
Capital budgeting, present value, time value of money function, asset management, analysis for decision making
1960
Portfolio theory
Marginal contribution of each asset to the overall risk of the company's portfolio.
1970
Financial markets
Possibility of negotiating debt and capital securities
Arbitrage pricing model
Option pricing model
1980
Personal ISR connection with the company's ISR
imperfecciones del mercado
inflation and interest rates
agency theory
1990
Deregulation of financial institutions
Use of electronic funds transfer
Globalization of financial and commercial operations
2000
Use of information and communication technologies and the internet as marketing strategies
Stakeholder participation
2010
Convergence of financial information
Risk management
The value of intangible assets
Sustainable development projects of organizations
Types of financial manager decisions
Investment
Financing
Asset Management
Dividend policy
Dividend theories
'' RESIDUAL THEORY OF DIVIDENDS ''
The profits generated in a period of operations must be allocated to projects whose profitability meets the expectations of the shareholders; if profits are still available, dividends must be shared among them.
Signaling theory
It establishes that shareholders always expect dividends as a sign of the good performance of the company. Dividends are a priority that should not be neglected.
Indicators of company value
Net profit
Earnings per share
Yield per share at book value
Yield per share at market value
Market types
Primary
The shares or debt instruments of the companies are traded on the stock market.
It is the company that receives the money that comes from the issuance of debt securities of companies and governments, issued through the stock market.
In public issues, it is the company that receives the money that comes from the issuance of securities.
Secondary
The transactions of purchase and sale of credit securities issued by companies and governments in the primary market are negotiated between investors.
Sarbanes Act - Oxley
It is the law that regulates financial accounting and auditing functions and severely penalizes corporate and white-collar crime against all entities listed on the United States stock exchange.
It is a United States Act signed by President George Bush, on July 30, 2002
Also known as:
Act of Reform of public accounting of companies and investor protection (SOX, SarbOx)
It arose due to fraud and other corporate crimes
Most renowned cases
Enron
Xerox
WorldCom
Finality
Avoid fraud and bankruptcy risks, protecting the investor.
Who is obliged to comply with this law?
All listed companies and their subsidiaries
Some of the requirements that it demands are:
Establish a new council, overseen by the SEC
Define new responsibilities and functions of the audit committee, which should have members independent of the administration.
That the managers accompany the reports with a personal certification
General purpose
Restore investor confidence
Improve corporate governance
Control activities at the corporate level
Reinforced
The application of the report (COSO)
Establish internal controls in companies
Establish an application guide
Monitoring of these controls