Παρουσίαση/Προβολή

(ECO221) -  Sp Papathanasiou - D Kenourgios

Περιγραφή Μαθήματος

Managerial Economics applies theory and methods to business, finance and administrative decision making. Because it uses the tools and techniques of analysis to solve managerial problems, managerial economics links traditional economics with finance and the decision sciences to develop vital tools for managerial decision making.

The value of managerial economics can be appreciated by examining its prescriptive and descriptive components. Managerial economics prescribes rules for improving managerial and finance decisions. It tells managers how things should be done to achieve organizational objectives efficiently. Managerial economics also helps managers to recognize how economic forces affect organizations and describes the economic and financial consequences of managerial behavior.   

As we know in an enterprise system the primary goal of financial management is to maximize their firms’ values. At the same time, we stress that managers should not do “whatever it takes” to increase the firm’s stock price. Managers have a responsibility to behave ethically, and when striving to maximize value, they must abide by constraints such as not polluting the environment, not engaging in unfair labor practices, not breaking the antitrust laws, and the like. So, we have to discuss the concept of valuation, explain how it depends on future cash flows and risk, and show why value maximization is good for society in general.

Stock and bond values are determined in the financial markets, so an understanding of those markets is essential to anyone involved with finance. Therefore, we have to cover the major types of financial markets, the rates of return that investors have historically earned on different types of securities, and the risks inherent in these securities. This information is important for anyone working in management and finance, and it is also important for anyone who has or hopes to own any financial assets.

Asset values depend in a fundamental way on earnings and cash flows as reported in the accounting statements. Therefore, we have to show how accounting data can be analyzed and used to measure how well a company has operated in the past and how well it is likely to perform in the future.

The time value of money (TVM), perhaps is the most fundamental concept in finance and perhaps in management. The basic valuation model, which ties together cash flows, risk, and interest rates, is based on TVM concepts.

Interest rates are a key determinant of asset values. We have to discuss how interest rates are affected by risk, inflation, liquidity, the supply of and demand for capital in the economy and business.

The discussion of interest rates leads directly to the topics of bonds and stocks where we show how these securities (and all other financial assets) are valued using the basic TVM model.

All these are essential to both investors and corporate managers.

With its prescriptive and descriptive components, managerial economics provides a comprehensive application of theory and methodology to managerial decision making.

 

Ημερομηνία δημιουργίας

Τρίτη 27 Σεπτεμβρίου 2022