Page 12 - DBP5043

10 PRINCIPLES THAT FORM THE

FOUNDATION OF FINANCIAL

MANAGEMENT

1 • We won’t take additional
risk unless we expect to
The risk-return be compensated with
trade off additional return

2 • a dollar received today
is worth more than a
The time value dollar received in the
of money future.

• in measuring value, we
will use cash flows
3 rather than accounting

Cash not profit is profits because it is only
the king cash flows that the firm
receives and is able to
reinvest.