Mini Case Why is corporate finance important to all managers? Corporate fiancé is the basic component of how business is run. It is necessary to direct funds or products in a company. Corporate finance also helps managers to forecast the funding requirements of their company and the necessary strategies to acquire those funds. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation.
January 5, 2012 FI515 Homework 1 Mini Case Why is corporate finance important to all managers? Corporate finance is the field of finance dealing with financial decisions that business enterprises make and the tools and analysis used to make these decisions. Corporate finance is important to all managers because it help managers learn the necessary skills select the corporate strategies and individual projects that add value to their company. It`s also tool for managers to know how to find funding for their company and what is the best strategy they need to adopt to do so. b.
Your boss has developed the following set of questions you must answer to explain the U.S. Financial system to Della Torre. a. Why is corporate finance important to all managers? Corporate finance is important to all manager because it has skills that all managers need to, examples are: 1. Identify and select the corporate strategies and individual projects that add value to their firms.
* Mini Case (p. 45) a) Why is corporate finance important to all managers? All managers are mandated with a goal to improve the businesses bottom line. Successful corporations have two main goals they must meet to stay in business. The first goal is “identifying, creating, and delivering highly valued products and services to its customers.” (Brigham) The second goal is to generate “enough cash to compensate the investors who provided the necessary capital.” Behind every managerial action, the manager must ally every action they take with meeting the above two goals. In order to evaluate the success of those decisions, managers must be able to analyze their decisions and fully understand the impact past decisions will have on the past, present, and future health of the company.
| Advantage | Disadvantage | Sole proprietorship: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Partnership: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Corporation | -unlimited life-easy transferability of ownership interest-limited liability | -corporate earnings may be subject to double taxation- more complex and time- consuming than creating a proprietorship or a partnership | c. How do corporations go public and continue to grow? What are agency problems? What is corporate governance? If a corporation continues to grow, it can raise additional funds through an initial public offering (IPO) by selling stock to the public at large. Agency problems occur when the managers of a corporation do what’s in their own interest rather than that of the company.
As the retailers incur virtually no costs by changing suppliers it is easy for them to play them against each other to get better terms. This negative effect is heightened by high supplier volume. As discount retailers account for a large percentage of their revenue, suppliers don’t have strong negotiating power. Power of Buyers – Low-Medium Purchases are not a large part of total income which
Acquisitions are often relatively complex from an accounting and tax point of view. IV. The value of a strategic fit is easy to estimate using discounted cash flow analysis. a. II and IV only b. I and III only c. I and IV only d. I, III, and IV only e. I, II, III, and IV 2. In a merger the: a. legal status of both the acquiring firm and the target firm is terminated.
Partnerships have many pros, but the most compelling is the way which they can be set up and maintained. You do not have to register with your state and pay fees, as you do to establish a corporation or limited liability company (LLC). And because a partnership is normally a "pass through" tax entity -- meaning the partners, and not the partnership, are taxed -- filing income tax returns is relatively easy. Unlike a corporation, there is no need to file separate tax returns for the corporate entity and its owners. Another advantage of a partnership is the flexibility that they offer.
Charity 5. Voluntary organisations 6. Co-operatives 7. Government What is a Sole Trader? A Sole Trader is a type of business, but in this case it is slight different than any other out there, this one means being the owner of its own negotiations, investments, profits, but the sole traders can also have some employees (2-3) NO MORE THAN IT .This is one of the properties as an option as a dealer to choose among other types of businesses, but especially above everything there are advantages and disadvantages in being the owner of its own negotiations.
Chapter 2 Question 26: Suppose you are a manager in a manufacturing business. How are the capital markets relevant to the effective performance of your job? Capital markets play an important role in any business not just in manufacturing. They assist in the mobilizing of resources. These resources are then diverted into productive channels.