Financial Management

Financial Management - Leah Celani Financial Management...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Leah Celani Financial Management Test 1 Finance Professions : -Corporate finance -Investments -Financial Advisers, Portfolio Managers, Securities Analyst -Financial institutions -Commercial Loan Officer, Insurance Company Analyst -International finance -Exchange Rates, Geo-Politics, Customs, Languages Reasons to study finance : -Marketing -Proposed product profitability -Accounting -Finance professionals make extensive use of accounting information -Management -profitability lies beneath all decision making -Personal finance -budgeting, retirement planning, calculating loan, car or house payments 3 major questions of business finance: -What long-term investments should the firm take on? Capital Budgeting -Where will we get the long-term financing to pay for the investment? more owners or Borrow -How will we manage the everyday financial activities of the firm? balancing cash flow by managing working capital Treasurer – oversees cash management, credit management, capital expenditures, and financial planning Controller - oversees taxes, cost accounting, financial accounting, and data processing. 3 major forms of business organizations: Sole proprietorship Advantages : easiest to start, least regulated, single owner keeps all profits, taxed once as personal income Disadvantages : limited to life of the owner, equity capital limited to owner’s personal wealth, unlimited liability, difficult to sell ownership interest Partnership Advantages: two or more owners, more capital available, relatively easy to start, income taxed once as personal income Disadvantages : unlimited liability – general partnership/limited partnership, partnership dissolves when one partner dies or wishes to sell, difficult to transfer, disagreements Corporation Advantages : limited liability, unlimited life, separation of ownership and management, transfer of ownership is easy, easier to raise capital, S- Corp combines advantages of sole proprietorship and corporation Disadvantages : separation of ownership and management (agency problem), double taxation (income taxed at the corporate rate and then dividends taxed at personal rate), an LLC has even more advantages International corporate forms: -Joint stock companies -Public limited companies -Limited liability companies -All share: -Public ownership -Limited liability Goals of Financial Management: -Maximize profit -Minimize costs -Maximize market share -Maximize the current value of the company’s stock -Maximize the current value per share of the company’s existing stock Ways to maximize owners wealth : Outsourcing Off-shoring Enron Corporate support of charities Sarbanes-Oxley Act(Sarbox) - to guard against Corporate Accounting Fraud and Financial
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/29/2010 for the course ACC 331 taught by Professor Dr.lee during the Fall '10 term at Jefferson College.

Page1 / 2

Financial Management - Leah Celani Financial Management...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online