Fin+Management+5+Ed+Solutions+Chapter+1

Fin+Management+5+Ed+Solutions+Chapter+1 - F inancial...

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Financial Management: Principles and Applications 5 th edition by Clive Wilson, Bruce Keers, Andrew Medlen and Brian Walters Solutions Manual
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Financial Management: Principles and Applications 5E - Solutions Manual Chapter 1 Goal and function of financial management 1.1 The role of the financial manager The following points could be included in the answer: the position of the financial manager in an organisational structure depends on the size of the organisation in large organisations, the financial manager is usually a specialised position who would generally report to a finance director or a chief executive officer (CEO). They could have a small specialised staff who would report to them or they could work by themselves; there would generally be no middle managers who would report to them in smaller organisations, the role of the financial manager is usually performed by the accountant, financial controller or the company secretary or shared between two or more of these positions. The financial manager would generally report to the CEO or owner of the business. In turn, they would have their own staff reporting to them such as assistant accountants or accounting clerks in some very small organisations the role of financial manager may be carried by the owner or manager of the business; in turn, they may rely on external advisors for further financial advice. 1.2 Forms of business ownership The following points could be included in the answer. The three main (common) forms of business ownership are: sole proprietorship partnership company. The advantages of a sole proprietorship include: this type of business has the most freedom from government regulation the owner does not share control with others all profits belong to the owner costs to set up the business structure are minimal. Some disadvantages are that: difficulties can be experienced in raising capital to finance expansion the owner has unlimited liability the owner has limited labour resources. The advantages of a partnership include: the cost of formation is low partners are able to pool experience and resources in some cases there are tax advantages. Some disadvantages are that: the partners have unlimited liability 2
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Financial Management: Principles and Applications 5E - Solutions Manual shared management can lead to disputes between partners a partnership is dissolved when there is a change in partners. There are several different types of company but the most common type is a company limited by shares, which limits the liability of shareholders to the amount uncalled on issued shares. Its advantages include: transfer of shares is easy shareholders’ liability is limited a company will continue to exist notwithstanding changes in shareholders access to larger amounts of capital shares of companies listed on the stock exchange are usually readily marketable and so facilitate the raising of additional capital
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This note was uploaded on 11/28/2011 for the course CA 10101 taught by Professor Aaaa during the Three '11 term at James Cook.

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Fin+Management+5+Ed+Solutions+Chapter+1 - F inancial...

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