Introduction to CF Flashcards
What are the three main concerns of CF management?
- To choose what long term investments to choose
- How the firm should raise funds for the investment
- How should current assets be managed and financed?
What is the goal of financial management?
To maximize profits and shareholders wealth
What forms of businesses do we have?
Sole proprietorship, partnership and corporations
What are the benefits of sole proprietorships and partnerships?
Simpler, less regulation, better tax rate
What are the drawbacks of sole proprietorships?
Owner has unlimited liability for business debt, all income is taxed as personal income and the amount of equity that can be raised is limited to the partners combined wealth
What are the benefits for corporations?
Ease of transferring ownership, limited liability for business debt and unlimited life of business
What are the drawbacks of corporations?
Most important one is double taxation
What major regulations impact public firms?
Issuance of Securities, Sarbanes-Oxley act and the securities exchange act
