Tiêu đề ​​PRINCIPLES OF FINANCE ✅

- allocate available resources in the most efficient way for: + consumption and saving decisions + investment decisions + financing decisions: should I borrow from the bank, mom, dad or use my own money + risk-management decisions: how to manage b. Business firms decisions: - The capital budgeting process: + the preparation of a plan for acquiring factories, machinery, research laboratories, showrooms, warehouses, and human assets to implement the strategic plan + The unit of analysis is the investment project. Investment projects are identified, analyzed, and implemented in the capital budgeting process *Question: What happen if the financial manager of the firm makes wrong the decisions in capital budgeting process? - The financing process: whether to borrow the bank or use their stocks or internal equity + identify the capital structure + the unit of analysis is the firm as a whole (not an investment project) *Question: Is it good for a financial manager not to borrow any loan? A: It depends. Việc chỉ sử dụng sẵn có mà không vay ngân hàng có thể gây ra lãng phí cơ hội, khó cạnh tranh. Vay ngân hàng là 1 lá chắn thuế -> ít thuế hơn mà nguồn lực vẫn như vậy Using Internal Equity - The firm avoids paying interest and principal, reducing financial risk. - The firm is less vulnerable to economic downturns or cash flow issues since it has no external liabilities. Borrowing Money from the Bank - No Tax Shield: Debt provides a tax shield, as interest payments are tax-deductible. This allows the firm to retain more of its earnings while utilizing the same resources. - Slower Growth: Internal funds may not be sufficient to finance large-scale projects or take advantage of market opportunities quickly while loans provide additional capital for investment in high-return projects, enabling the firm to expand more aggressively. Conclusion: Finding the Right Balance - Working capital: vốn lưu động dùng để chi trả cho các hoạt động kinh doanh (trả tiền lương cho nhân viên, tiền thuê mặt bằng,...) 3. FINANCIAL SYSTEM