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SLIDE 2A

10 KEY PRINCIPLES OF FINANCE

10 KEY PRINCIPLES OF FINANCE


PRINCIPLE #1A : THE TIME VALUE OF MONEY A DOLLAR TODAY IS WORTH MORE THAN A DOLLAR TOMORROW/IN THE FUTURE. PRINCIPLE #1B : A SAFE DOLLAR IS WORTH MORE THAN A RISKY DOLLAR.
PRINCIPLE #2 : THE RISK-RETURN TRADE-OFF WE WONT TAKE ON ADDITIONAL RISK UNLESS WE EXPECT TO BE COMPENSATED WITH ADDITIONAL RETURN.

10 KEY PRINCIPLES OF FINANCE


PRINCIPLE #3 : CASHNOT PROFITSIS THE KING.
PRINCIPLE #4 : INCREMENTAL CASH FLOWS-ITS ONLY WHAT CHANGES THAT COUNTS.

PRINCIPLE #5 : THE CURSE OF COMPETITIVE MARKETS-WHY ITS HARD TO FIND EXCEPTIONALLY PROFITABLE PROJECTS.
PRINCIPLE #6 : EFFICIENT CAPITAL MARKETS-THE MARKETS ARE QUICK AND THE PRICES ARE RIGHT.

10 KEY PRINCIPLES OF FINANCE


PRINCIPLE #7 : THE AGENCY PROBLEMSMANAGERS WONT WORK FOR OWNERS UNLESS ITS IN THEIR BEST INTEREST.
PRINCIPLE #8 : TAXES BIAS BUSINESS DECISIONS. PRINCIPLE #9 : ALL RISK IS NOT EQUAL-SOME RISK CAN BE DIVERSIFIED AWAY AND SOME CANNOT.

PRINCIPLE #10 : ETHICAL BEHAVIOUR IS DOING THE RIGHT THING AND ETHICAL DILEMMAS ARE EVERYWHERE IN FINANCE.

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