What is corporate finance?
The main(prenominal) role of CF is the evaluate investments and raise metropolis to strain them:
* Capital budgeting what LT investments should the firm undertake? (Fixed assets- tangible/intangible)
* Capital social system how should the firm raise money to fund these investments? (current liabilities/LT debt/shareholders equity)
* Working capital/ST asset copement how stick out the firm best manage+finance its ST assets?
The goal of the firm to create place for the federations shareholders - Maximisation of shareholder wealth as it considers currency flows, quantify of cash flows, and risk of cash flows.
BUT:
* galore(postnominal) things can cause changes in stock price e.g. economy.
SO, the food market price of a firms stock reflects the treasure of the firm as seen by its owners AND takes into acc complications of real world risk
* Benefits ordering as scarce resources are directed to their most cultivatable use by businesses competing to create wealth
* It is unclear about the date frame over which profits are measured
* Profits can be manipulated by various accounting policies
* It ignores risk and timing of cash flows
e.g.
Enron, WorldCom
The role of the financial manager
* Maximise shareholder value by: selecting value-creating projects +financing decisions
* Buying assets that generate > cash than make up and selling stocks/bonds that raise > cash than cost
Legal forms of business memorial tablet: sole proprietorship, partnership, corporation
SOLE PROPRIERTORSHIP
* Owned by an individual
* owner retains title to assets and profits but must also clear losses
* Unlimited liability
* No legal requirements to start operation
* end point occurs on owners death or by choice
PARTNERSHIP is where 2 or more persons come together as co-owners:
* ii types- general partnerships and limited partnerships
* General partnership each partner has unlimited liability
* Limited...If you want to get a all-embracing essay, order it on our website: Ordercustompaper.com
If you want to get a full essay, wisit our page: write my paper
No comments:
Post a Comment