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Corporate finance - Coggle Diagram
Corporate finance
Business organizations in US
Sole proprietorship
Advantages: easiest to star, least regulated, singles owner, taxes once as personal income
Limited to life owner, unlimited liability, difficult to sell
Partner ship
Advantages: two or more owners, more capital, easy to start, income taxes.
Disadvantages: Unlimited liability, general partnership, difficult to transfer ownership
Corporations
Advantages: Limited liability, unlimited life, separation of ownership, transfer is easy, easier to raise capital
DIsadvantages: separation of ownership, double taxation
The agency problem
Agency relationship
Hires an agent to represent his interest
Stockholders hire managers to run the company
Agency problem
Conflict or interest between principal and agent
Management goals and agency costs
Financial management decisions
Capital budgeting: what projects should the business take on?
Capital structure: pay the assets, debt or equity?
Day to day in finances
SA
SAPI
SAPIB
SAB
Chief financial officer (CFO) Treasurer and controller