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Transcript of Finance
Guest Speaker Profile:
Simran Gill, CFA
Partner at Bridgemark Financial
Specializes in Financial Consulting and Corporate Finance
BBA Finance from SFU
Chartered Financial Analyst
Began career as a Junior Strategy Consultant working for IBM Global Services
In order to understand a successful business, you must first understand finance
I may be biased
Examples of Assets
Budgeting (this is quasi accounting)
Financing (note: Financing ≠ Finance)
Evaluation of opportunities
Sales and purchases of your business
Time Value of Money
Money is worth more today than it is tomorrow.
Finance looks forward
Accounting produces many of the tools and inputs that inform good financial decisions.
The Importance of Finance
Practical Application: Impact on your Career
Differences between Finance and Accounting
Overview of Financial Principles
Corporate Finance vs. Personal Finance
What is Finance?
of asset management
What is an Asset?
Something (tangible or not)
How Critical are these to your areas of interest?
Travel and tourism
Optimization is the Goal
Finance seeks to manage the selection of assets and liabilities in order to maximize future income
Ownership of Shares
are the flip side from assets....
The obligation to pay future income as a result of a previous agreement
For most businesses, this means that liabilities are used to fund purchase of assets with the intent to earn more income than could otherwise be earned.
Has anybody worked or considered working in Finance?
What are your experiences with finance related
Which areas do you think are most important
based on your own experiences?
as a financial management consultant.
Rule of thumb:
while accounting looks back
Cash Flow Statement
Accounting Inputs are used by Financial Analysts to assess the strength of companies and or opportunities
Often, metrics are use to allow for comparison and measurement across multiple investment options
Return on Investment
Return on Sales
Interest Coverage Ratios
The theory of finance is guided by a series of core principles
The argument that markets are not efficient because human psychology plays a great part in the performance of investments
Examples of types of biases that affect financial performance:
Modern Portfolio Theory
A combination of investments into a well diversified portfolio led to a better return than any individual asset.
Risk vs. Return
As the risk for an investment increases,
the expected return increases as well.
PV = Present Value
FV = Future Value
i = interest rate
n = number of periods
Red line represents
Orange dots represent individual Investments
MPT lead to the movement towards diversification, though there are reasons that diversification is not always optimal
As a Business Owner, however, there is an interplay between corporate and personal finance
Products targeted at your corporation:
Corporate Bond issuance
Business Lines of Credit
Products targeted at you:
Mutual funds/ Index funds
Services targeted at your corporation:
Project Analysis/ Business Planning
Mergers & Acquisitions
Services targeted at you:
Products and services targeted towards you differ from those targeted towards your business
Mining/ Oil Gas
Risk models/ Financial models
Governments, PPP's, and Public & Privately owed companies
Clients in Canada, USA, Europe, Asia, and the Caribbean.