As a result many top executives have come from the

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Unformatted text preview: inancial manager’s duties. As a result, many top executives have come from the finance area. Another important recent trend has been the globalization of business activity. U.S. corporations have dramatically increased their sales, purchases, investments, and fund raising in other countries, and foreign corporations have likewise CHAPTER 1 The Role and Environment of Managerial Finance 5 increased these activities in the United States. These changes have created a need for financial managers who can help a firm to manage cash flows in different currencies and protect against the risks that naturally arise from international transactions. Although these changes make the managerial finance function more complex, they can also lead to a more rewarding and fulfilling career. Legal Forms of Business Organization The three most common legal forms of business organization are the sole proprietorship, the partnership, and the corporation. Other specialized forms of business organization also exist. Sole proprietorships are the most numerous. However, corporations are overwhelmingly dominant with respect to receipts and net profits. Corporations are given primary emphasis in this textbook. Sole Proprietorships sole proprietorship A business owned by one person and operated for his or her own profit. unlimited liability The condition of a sole proprietorship (or general partnership) allowing the owner’s total wealth to be taken to satisfy creditors. A sole proprietorship is a business owned by one person who operates it for his or her own profit. About 75 percent of all business firms are sole proprietorships. The typical sole proprietorship is a small business, such as a bike shop, personal trainer, or plumber. The majority of sole proprietorships are found in the wholesale, retail, service, and construction industries. Typically, the proprietor, along with a few employees, operates the proprietorship. He or she normally raises capital from personal resources or by borrowing and is responsible for...
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This document was uploaded on 01/19/2014.

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