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Finance, the art and science of managing money,
affects the lives of every person and every organization. Major opportunities in financial services exist
within banking and related institutions, personal
financial planning, investments, real estate, and insurance. Managerial finance is concerned with the
duties of the financial manager in the business firm.
It offers numerous career opportunities, as shown in
Table 1.3. The recent trend toward globalization of
business activity has created new demands and opportunities in managerial finance.
The legal forms of business organization are the
sole proprietorship, the partnership, and the corporation. The corporation is dominant in terms of
business receipts and profits, and its owners are its
common and preferred stockholders. Stockholders
expect to earn a return by receiving dividends or by
realizing gains through increases in share price. The
key strengths and weaknesses of the common legal
forms of business organization are summarized in
Table 1.1. Other limited liability organizations are
listed and described in Table 1.2.
LG1 Describe the managerial finance function and
its relationship to economics and accounting.
All areas of responsibility within a firm interact
with finance personnel and procedures. In large
firms, the managerial finance function might be
handled by a separate department headed by the
vice president of finance (CFO), to whom the treasurer and controller report. The financial manager
must understand the economic environment and relies heavily on the economic principle of marginal
analysis to make financial decisions. Financial managers use accounting but concentrate on cash flows
and decision making.
LG2 Identify the primary activities of the financial
manager within the firm. The primary activities
of the financial manager, in addition to ongoing involvement in financial analysis and planning, are
making investment decisions and making financing
LG3 LG4 Explain why wealth maximization, rather tha...
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This document was uploaded on 01/19/2014.
- Fall '13