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Unformatted text preview: zation. 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 decisions. LG3 LG4 Explain why wealth maximization, rather tha...
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This document was uploaded on 01/19/2014.

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