M12-S1 - Introduction

Finance is about two things:

1. Raising capital
2. Investing capital

with the objective of increasing the wealth of the shareholders. The role division can be described as: Treasurer:

• Cash planning
• Bank relation
• Risk
• Insurance
• Dividend policy

Cares about:

Cash in 
Cash out

-> $\Delta$ in cash balance.

Controller:

• Budgeting
• Record keeping
• Auditing
• Taxation
• Salary administration

Cares about: Revenue - Costs -> Profit

How to discriminate different types of business?

Business	Characteristics	Metric
Electrical Utility	Capital intensive	High Property and Equipment costs
Trading Company	Volume driven business	Low fixed assets, low margins, high inventory turnover
'Japanese' Company		Long term debt / Owner's equity is the largest of all
Supermarket	Very short collection period	Very low account receivable ,Low margins
Aero space	Low turnover, High Inventories