Not all of these concerns fall solely upon the

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one area of the globe to another. Not all of these concerns fall solely upon the shoulders of the CFO, but they all have financial ramifications to the company and the CFO must be abreast of what is going on in every part of the company. Chapter 18 of this text has more to say on this topic. In 2007 Starbucks will open its first stores in Russia and India. Aside from that, the company is seeking to expand its offerings by rolling out new ready-to-drink beverages, which sold 45 million units in the products’ first year, and expanding their packaged-coffee offerings. In addition, the company is extending the equity of the Starbucks’ brand with its first venture into a film partnership and is extending its music strategy beyond the U.S. market. Inside its stores, Starbucks has sought innovative ways to keep sales growing. It has addressed customers’ desires for a broad range of options, including reduced-calorie and lower-fat menu options and is expanding its fresh lunch and warm breakfast-sandwich offerings. Answers to Review Questions 1. Finance is the art and science of managing money. Finance affects all individuals, businesses, and governments in the process of the transfer of money through institutions, markets, and instruments. 2. Financial services is the area of finance concerned with the design and delivery of advice and financial products to individuals, businesses, and government. Managerial finance encompasses the functions of budgeting, financial forecasting, credit administration, investment analysis, and funds procurement for the firm. Managerial finance is the management of the firm’s funds within the firm. This field offers many career opportunities, including financial analyst, capital budgeting analyst, and cash manager. ( Note: Other answers possible.) 3. Sole proprietorships are the most common form of business organization, while corporations are responsible for the majority of business receipts and profits. Corporations account for the majority of business receipts and profits because they receive certain tax advantages and can expand more easily due to access to capital markets. 4. Stockholders are the true owners, through equity in common and preferred stock, of a corporation. They elect the board of directors, which has the ultimate authority to guide corporate affairs and set general policy. The board is usually composed of key corporate personnel and outside directors. The president or chief executive officer (CEO) reports to the board. He or she is responsible for day-to-day operations and carrying out policies established by the board. The owners of the corporation do not have a direct relationship with management but give their input through the election of board members and voting on major charter issues. The owners of the firm are compensated through the receipt of cash dividends paid by the firm or by realizing capital gains through increases in the price of their common stock shares.
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