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INTRODUCTION TO FINANCIAL MANAGEMENT (Financial Within the Orgnization…
INTRODUCTION TO FINANCIAL MANAGEMENT
Financial Within the Orgnization
Chief Operating Officer
Chief Executive Officer
Board of Directors
Chief Financial Officer
FORM OF BUSINESS ORGANIATION
Partnership
ADVANTAGE
-Ease of formation
-Subject to few regulation
-No corporate income taxes
DISADVANTAGE
-Difficult to raise capital
-Unlimited liability
-Limited life
Corporation
ADVANTAGE
-Unlimited Life
-Easy transfer of ownership
-Limited liability
-Ease of raising capital
DISADVANTAGE
-Double taxation
-Cost of set-up and report filing
Proprietorship
ADVANTAGE
-Ease of formation
-Subject to few regulation
-No corporate income taxes
DISADVANTAGE
-Difficult to raise capital
-Unlimited liability
-Limited life
STOCK PRICES AND SHAREHOLDER VALUE
-Goal to maximize shareholder wealth
Some important business Trens
-Recent corporate scandals have reinforce the importance of business ethics,and have spurred additional regulation and corporate oversight
Increased globalization of business
CONFLICT BETWEEN MANAGERS AND STOCKHOLDERS
Managers are naturally inclines to act in their own best interest
Factors affect managerial behavior
-Managerial compensation managerial
-Direct intervention by shareholder
-The threat of firing
-The threat of takeover