jan 14th - Thursday Finance is made up of 3 areas Corporate...

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Thursday, January 14, 2016 Finance is made up of 3 areas— Corporate or managerial finance—finance from the business POV Investments – stocks and bonds etc Banking—under which we have capital markets and institutions (insurance companies, pension funds etc) What is the goal of a financial manager? To maximize shareholder wealth i.e. to increase the stock price of the company. If you are a stockholder, it means you own a part of the company. (common) Stockholders are owners of the firm. As an owner, you get to vote for the board of directors. Directors are the ones who appoint management—so basically, CEO’s (chief executive officer). Under the CEO, we have the various depts.—marketing, production, accounting and finance. Accounting prepares financial statements—income statements/ balance sheet, dealing with info from the past years i.e. historical data; while the finance side deals with forecasting of the future based on past info. Finance deals with how much money they can raise—i.e. forecasting, planning, investing etc. all these decisions are made and have to be made in time to make sure the deadlines are being met and the company is not going under. Different forms of business organizations 1. Proprietorship—means 1 owner Advantages —make all the decisions, taxed like an individual, it is easy to form 2. Partnership—means 2 or more owners Advantages— same as above Disadvantages of both unlimited liability.
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