Module 16: Understanding Financial Management and Securities Markets

In today’s fast-paced global economy, managing a firm’s finances is more complex than ever. For financial managers, a thorough command of traditional finance activities—financial planning, investing money, and raising funds—is only part of the job. Financial managers are more than number crunchers. As part of the top management team, chief financial officers (CFOs) need a broad understanding of their firm’s business and industry, as well as leadership ability and creativity. They must never lose sight of the primary goal of the financial manager: to maximize the value of the firm to its owners.

Financial management—spending and raising a firm’s money—is both a science and an art. The science part is analyzing numbers and flows of cash through the firm. The art is answering questions such as these: Is the firm using its financial resources in the best way? Aside from costs, why choose a particular form of financing? How risky is each option? Another important concern for both business managers and investors is understanding the basics of securities markets and the securities traded on them, which affect both corporate plans and investor pocketbooks.

This chapter focuses on the financial management of a firm and the securities markets in which firms raise funds. We’ll start with an overview of the role of finance and of the financial manager in the firm’s overall business strategy. Discussions of short- and long-term uses of funds and investment decisions follow. Next, we’ll examine key sources of short- and long-term financing. Then we’ll review the function, operation, and regulation of securities markets. Finally, we’ll look at key trends affecting financial management and securities markets.

1. Discuss how finance and the financial manager affect a firm’s overall strategy.
2. Identify the types of short-term and long-term expenditures firm's make.
3. Identify the main sources and costs of unsecured and secured short-term financing.
4. Contrast the key differences between debt and equity, and differentiate the major types and features of long-term debt.
5. Illustrate when and how firms issue equity, and what are the costs.
6. Discuss how securities markets help firms raise funding, and what securities trade in the capital markets.
7. Distinguish when investors buy and sell securities and how securities markets regulated.
8. Discuss the current developments in financial management and the securities markets.

To achieve these objectives:

1. Read the Module 16 Introduction 
   
2. Read and view the materials in the Module 16 Pressbooks book
3. Complete the Module 16 quiz.
4. Complete the Module 16 Ethics Activity
5. Compete the Module 16 Critical Thinking Case Group Assignment
   

Module Pressbooks Resources and Activities