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Simran Gill

on 11 March 2014

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Transcript of Finance

LEAD 1150: 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
Please note:
I may be biased
Examples of Assets
Finance Activities
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)
that promises
future income
How Critical are these to your areas of interest?
Event Planning
Public Relations
Wedding Planning
Travel and tourism
Optimization is the Goal
Finance seeks to manage the selection of assets and liabilities in order to maximize future income
Tangible Assets
Oil Field
Rental Property
Ownership of Shares
Intangible Assets
Brand Recognition
are the flip side from assets....
The obligation to pay future income as a result of a previous agreement
Examples include:
Credit extensions
Legal rulings
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.
Your Experiences:
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?
My Experiences
as a financial management consultant.
Rule of thumb:
while accounting looks back
Financial Statements
Income Statement
Balance Sheet
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
Inventory Turnover
Interest Coverage Ratios
P/E Ratios
Key Principles
The theory of finance is guided by a series of core principles
Behavioural Finance
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:
Herd Behaviour
Disposition Bias
Conservatism Bias
Representativeness Bias
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.
Risk (σ)
Return (r)
PV = Present Value
FV = Future Value
i = interest rate
n = number of periods
Risk (σ)
Return (r)
Red line represents
"Efficient Frontier"
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
Corporate Finance
Products targeted at your corporation:
Business Loans
Corporate Bond issuance
Equity issuance
Business Lines of Credit
Personal Finance
Products targeted at you:
Mutual funds/ Index funds
Home Mortgages
Credit Cards
Services targeted at your corporation:
Project Analysis/ Business Planning
Risk Analysis
Corporate restructuring
Mergers & Acquisitions
Succession planning
Services targeted at you:
Retirement planning
Wealth management
Credit consolidation
Products and services targeted towards you differ from those targeted towards your business
Forestry Products
Green Technology
Mining/ Oil Gas
Work Outputs:
Project evaluations
Company valuations
Risk models/ Financial models
Business planning
Governments, PPP's, and Public & Privately owed companies
Clients in Canada, USA, Europe, Asia, and the Caribbean.
Full transcript