Introduction to Corporate Finance – Firm Goals and Financial Manager Role

This video covers the following learning objectives:

• Define the goals of financial management:

  • Understand the distinction between profit maximization and wealth maximization.

  • Recognize why shareholder wealth maximization is the appropriate primary objective.

  • Explain the importance of time value of money and risk in financial decision-making.

• Understand the role of the financial manager:

  • Identify the major financial decisions handled by financial managers (investment, financing, dividend, and liquidity decisions).

  • Analyze how financial managers contribute to firm value through capital budgeting, capital structure, and working capital management.

  • Evaluate how financial managers interact with capital markets to communicate firm strategy and ensure accurate valuation.

• Apply core financial reasoning to decision-making scenarios:

  • Solve problems involving choice between projects using basic risk-return and NPV logic.

  • Interpret financial trade-offs such as debt vs equity financing and dividend payout vs reinvestment.

• Critically assess the philosophical foundations of financial objectives:

  • Articulate the limitations of accounting-based goals like profit maximization.

  • Understand the role of market expectations, investor behavior, and informational asymmetries in shaping firm value.