Session Description: Corporate finance, as a body of knowledge, looks at the first financial principles involved in running a business, with decisions broken down into three groupings – investment (where you decide what assets/projects to invest in), financing (where you find the right mix of debt & equity, as well as the right type of debt and dividends (where you determine how much (if any) cash to return to your owners. In this session, I do a quick overview of these first principles, with a preliminary assessment of how they evolve with the corporate life cycle.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/CLC/slides/Ch5.pdf
Exercise:
a. Given your assessments of the five companies, which corporate finance decision (investment, financing, dividend) would you expect to have primacy?
b. Are there any corporate finance mismatches (companies not behaving the way they should, given their life cycle position) in your firms?
