Financial management: the concept

Published on September 28, 2023   9 min
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Welcome to this lecture on financial management. My name is Rudy Aernoudt, I'm a professor at the University of Kent which is a university in Belgium.
This lecture is based on eight talks. The first one today will be about financial management. The concept, let's say the introduction, we move to the second one on investment analysis, moving to the valuation of a company and then we're looking to different kinds of financing, such as venture capital, Mezzanine, business angels, love money, and we'll end by issuing shares and financing to stocks.
If you speak about financial management, what do we mean? Financial management has an objective to increase the value of the company for the shareholders. This is a common accepted definition, so it's about value that's why it's important that we speak about valuation and it is for the shareholders. Of course, for the shareholders is quite limited as an approach. But we should see that shareholders, of course, are important because they finance the company. But at the same time, stakeholders are involved because stakeholders do influence the value of the company. If we say in the narrow definition, it's about shareholders, we do indirectly imply stakeholders. Second comment on the definition. Mostly we discussed in terms of risk and return. Risk and return is of course, limited because we speak now about the impact on the environment, the social impact, so we must apply in our value approach, risk, return, and the third element will be impact. Each time you make a decision, for instance, an investment decision or a decision to increase or decrease stocks, each time you have to say what is the impact on the value of the company taking into account the risk it implies, the financial return it involves, and the possible impact on the environment and social.