All You Need to Know to Become a CFO

This book examines how companies make their investment and financing decisions and how a CFO is involved in executing the strategic direction of the firm.

The book introduces some essential concepts underlying corporate finance decisions. We start with a brief introduction to the book as a whole and then discuss three main issues:
• The role of the Financial Manager in an organization
• Principles underlying the three main decisions companies have to take: the investment, the financing and the dividend policy decisions
• The firm, its environment (its shareholders, bondholders, the financial market and the society) and the main objectives that govern and guide its decisions. We will see that all companies, whether private, public or state-owned, should have an objective when making their decisions. Moreover, a good objective should have a set of characteristics.
We will discuss these characteristics, and provide an analysis of the objective of both private and publicly quoted companies, namely maximizing firms’ stock price under various conditions. We will then examine in depth why companies focus strongly on value maximization, and why, in practice, the focus is shifted towards stock price maximization. We will also discuss a number of conflicts between managers, shareholders and bondholders, and the role of corporate governance and financial markets in Corporate Finance.