Mini Case Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle De la Torre, a professional tennis player who has just come to the United States from Chile. De la Torre is a highly ranked tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. De la Torre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to explain the U.S. Financial system to Della Torre.
* 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.
There are three forms of businesses, the sole proprietorship, partnership and companies. The default option is to be a sole proprietor. With this option there are fewer forms to file than with other business organizations. The business is structured in such a manner that legal documents are not required to determine how profit-sharing from business operations will be allocated. This structure is acceptable if you are the business's sole owner and you do not need to distinguish the business from yourself.
FI515_Homework1 Mini Case (p. 45) a. Why is corporate finance important to all managers? Successful companies must be able to generate enough cash to compensate the investors who provided the necessary capital. In order to do this managers must be able to evaluate any proposal, whether it relates to marketing, production, strategy, or any other area, and implement only the projects that add value for your investors. For this, you must have expertise in finance.
The recommended hurdle rates for the two divisions are 8.53% for the Telecommunications division and 11.38% for the Products and Services division. We believe that the adoption of this dual-rate policy will more accurately reflect each division’s cost of capital resulting in an optimally effective capital investment decision making process. Background Due to recent controversy regarding Victor Yossarian and lagging stock performance, we have conducted a financial analysis to determine whether the current value creation model of Teletech is optimally designed to increase shareholder wealth. Teletech currently operates under two divisions, Telecommunications and Products and Services. Currently, Teletech employs a single corporate hurdle rate to all project proposals without consideration of the divisional segment from which it originates.
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?
Mini Case a. Why is corporate finance important to all managers? * Corporate finance provides the skills managers need to identify and select the corporate strategies and individual projects that add value to their firm. It is also important because corporate finance forecasts the funding requirements of their company, and devises strategies for acquiring those funds. b.
Executives are hired to act as fiduciary agents of their stockholders for the purpose of increasing wealth (Smith, 2003). He argued that CSR amounted to spending the stakeholder’s money that clouded decision making by reducing the firm’s focus on maximizing profits, thereby placing the firm at a competitive disadvantage (Smith, 2003). Friedman’s approach is practical and takes into account the interests of both firms and society. However, it is not realistic to think that a firm can separate business and social responsibilities. According to Mintzberg "the strategic decisions of large organizations inevitably involve social as well as economic consequences, inextricably intertwined...there is no such thing as a purely economic strategic decision."
This means that the owner of a business should not place any personal assets on the business balance sheet. The balance sheet of the business must reflect the financial position of the business alone. Also, when transactions of the business are recorded, any personal
It is the simplest and most flexible business structure. b. Characteristics - Owned by one person or one company - It is not a legal entity (i.e. it cannot sue or be sued in its own name and it cannot own or hold any property) - Profits are taxed at personal income tax rates c. Who Can Register - Almost anyone or any company can register a sole-proprietorship - There are some exceptions. For instance, un-discharged bankrupts may not be allowed to register such entities in Singapore. - The owner must appoint a local manager if he/she is not "ordinarily resident" in Singapore (does not have a local address and cannot legally remain in Singapore for a long period of time) - The local manager must be above 18 years old and be one of the following: a.