FIN 3000 Notes.docx - FIN 3000 Luke McElfresh Chapter 1...

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FIN 3000 Luke McElfresh Chapter 1 - Introduction to Corporate Finance Financial manager try to answer some of these questions (responsible for the financial health of the company) Capital Budgeting - long-term decisions (Fixed assets or investments) Capital Structure - how do I fund the long-term investments. What is the best mixture of long-term debt or equity to fund the investments? Working Capital Management - deals with current assets and liabilities (Day-to-Day activities) The top manager within a firm is the CFO (Chief Financial Officer) 2 roles that work hand and hand with the CFO. - Treasurer - Controller Forms of Business Organizations (Three major forms in the US) Sole Proprietorship Advantages : Easy to start, least regulated, Single owner keeps all the profits, Taxed once as personal income Disadvantages : Limited to the life of the owner, equity capital limited to owner's personal wealth (What they own or put into the company), unlimited liability (doesn't just stop with the wealth of the company, debtors will come after personal items), Difficult to sell ownership interest. Partnership Advantages : Two or more owners, more capital available, relatively easy to start, income taxed once as personal income.

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