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.
1. From the annual reports you previewed, what is the company’s corporate strategy? What are their company goals and were they successful in achieving those goals? Please list the company of the annual report you previewed. 2.
What must a company excel at? What value addition our customers expect from us? How much value a company generates for its shareholders? How a company can improve and innovate? For further elaboration following elements are used in the balanced scorecard: Financial Perspective Internal Processes Learning and Growth Customer Perspective Strategy Map for Ashton Graduate School: The strategy map specifically provides the information about the strategic direction towards the objectives that are more significant for all the employees of the company to act on it accordingly.
Cost of capital can help define the acceptability of investment opportunities. Besides, the cost of capital can scheme the corporate finance arrangement. Generally, the best way for designing the corporate finance structure is based on information of changing of the capital market. So, manager can figure out information like accounting reports and their cost of capital to market. By using the information, manager can use cost of capital for restructure the market price and earning per share in order to bring advantage for company.
According to Friedman, “A corporate executive is an employee of the owners of the business. He has a direct responsibility to his employers and shareholders. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society” (221). The executives of the corporation have a responsibility to the shareholders because the corporation’s money is the shareholders money. As we read in the Forbes article, the author stated: “How did the corporation’s money somehow become the shareholder’s money?
A company may have a variety of forms. Business forms can be divided into two groups, those businesses which are an extension of the owner(s), and those which set up an entity distinct from the owners. Sole proprietorships and partnerships are business structures which expose the individual owner(s) to the liabilities of the business. These business types are inexpensive to set up, do not have regular state filing requirements, and do not have strict reporting requirements. As such these types of business are inexpensive to start up and maintain
| 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.
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.
Why should organisations collect, file and maintain accurate financial records? To have a record of how the business is running. To determine how the business is sitting financially and to inspire different processes to assist in growing the business. It will also display what money is going where and whether there is any room for alterations in staffing, produce, and marketing. Basically, it is used to anaylse the business as a whole and per section and to determine performance.
Using the knowledge we have gathered from this course thus far, we will identify the current strategic problems that Citigroup is facing and will recommend solutions to address these problems. We start by giving a brief history of the company, talking about when it was founded, how it has grown over the years, and what it has achieved. We then move on to the current state of the company, presenting recent financial results, a description of its current operations, and the number of staff it employs. Next, we give an overview of and analyze the general industry environment in which Citigroup operates. We then identify the strategic problems that Citigroup as a company is facing, and the strategic problems the financial services industry as a whole is facing.