1.RISK - RETURN Trade Off -As the risk increases the return increases , Additional Risk are taken when we expect additional return
2.Time Value of Money - The rupee/dollar received today is worth more than a rupee/dollar received in the future
3.Cash is the King of Business, Not the profit
4. Incremental Cash Flows - It is the difference between the cash flows if the project is taken on versus what they will be if the project is not taken on
5.Highly Competitive Market
6.Efficient Capital Markets
7.The Agency Problem - Conflict between the stockholders and the managers
8.Taxes Bias Business Decisions
9.All risk is not equal - Some risk can be diversified but some cannot be diversified
10. Business Ethics
CORPORATE FINANCIAL MODEL
The above diagram depicts the corporate finance model in a simplified way.Professor Srikanth who interacted with us for Financial Reporting and analysis provided this diagram.I loved this diagram!! It beautifully depicts the whole process.He made every session very interesting . He was a person filled with energy !!! I enjoyed reading finance and he gave us an opportunity to analyze FMCG balance sheets !! It was a great learning filled with fun !!!
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