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Unformatted text preview: er (CEO) is responsible for managing
day-to-day operations and carrying out the policies established by the board. The
CEO is required to report periodically to the firm’s directors.
It is important to note the division between owners and managers in a large
corporation, as shown by the dashed horizontal line in Figure 1.1. This separation and some of the issues surrounding it will be addressed in the discussion of
the agency issue later in this chapter. 8 PART 1 Introduction to Managerial Finance Other Limited Liability Organizations
limited partnership (LP)
S corporation (S corp)
limited liability corporation (LLC)
limited liability partnership (LLP)
See Table 1.2. A number of other organizational forms provide owners with limited liability.
The most popular are limited partnerships (LPs), S corporations (S corps), limited
liability corporations (LLCs), and limited liability partnerships (LLPs). Each represents a specialized form or blending of the characteristics of the organizational
forms described before. What they have in common is that their owners enjoy
limited liability, and they typically have fewer than 100 owners. Each of these
limited liability organizations is briefly described in Table 1.2. The Study of Managerial Finance
An understanding of the theories, concepts, techniques, and practices presented
throughout this text will fully acquaint you with the financial manager’s activities
and decisions. Because most business decisions are measured in financial terms,
the financial manager plays a key role in the operation of the firm. People in all
areas of responsibility—accounting, information systems, management, marketing, operations, and so forth—need a basic understanding of the managerial
All managers in the firm, regardless of their job descriptions, work with financial personnel to justify laborpower requirements, negotiate operating budgets,
deal with financial performance appraisals, and sell proposals at least partly on the
basis of their financial merits. Clearly, those managers who understand the finan- TABLE 1.2 Other Limited Liability Organizations Organization Description Limited partnership (LP) A partnership in which one or m...
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This document was uploaded on 01/19/2014.
- Fall '13