Chapter 1 - Introduction to Corporate Finance
Five Main Areas of Finance: - Answer- - Corporate Finance
- Investments
- International Finance
- Financial Institutions
- FinTech
Financial Manager is Responsible To Answer the Three Questions of Corporate Finance, which
are... - Answer- - What long term investments will you take on?
- How will you finance your long-term investments?
- How will you manage day-to-day financial activities?
What types of things is the controller in charge of? - Answer- Accounting and taxation
What types of things is the treasurer in charge of? - Answer- Financial planning and capital
expenditures
What is capital budgeting? - Answer- The process of deciding what long term investments to make
and how to manage them
What is capital structure? - Answer- Deciding how you will finance your long term investments,
debt or equity?
What is working capital management? - Answer- Managing your everyday financial activities
What are the three major forms of business ownership? - Answer- Sole proprietorship,
partnership, corporation
What is the least regulated form and easiest to start of business ownership? - Answer- Sole
proprietorship
Give some key characteristics of a sole proprietorship: - Answer- Unlimited liability, no double
taxation (taxed at owners personal tax rate), limited to owner's life span, hard to generate capital
Give some key characteristics of a partnership: - Answer- Two or more owners, has general and
limited partners. General have unlimited liability, limited have liability up to what they have
invested. Cannot easily raise capital.
Give some key characteristics of a corporation: - Answer- All rights of an actual person, more
regulated, double taxation, easier to raise capital, easier to start, easy to transfer ownership, not
limited to life of owners
Goals of financial management: - Answer- Survive, maximize profits, minimize costs, beat the
competition, avoid insolvency, maximize sales, maintain steady earnings growth
Financial managers are to make decisions in the best interest of the _______________________
- Answer- shareholders
Five Main Areas of Finance: - Answer- - Corporate Finance
- Investments
- International Finance
- Financial Institutions
- FinTech
Financial Manager is Responsible To Answer the Three Questions of Corporate Finance, which
are... - Answer- - What long term investments will you take on?
- How will you finance your long-term investments?
- How will you manage day-to-day financial activities?
What types of things is the controller in charge of? - Answer- Accounting and taxation
What types of things is the treasurer in charge of? - Answer- Financial planning and capital
expenditures
What is capital budgeting? - Answer- The process of deciding what long term investments to make
and how to manage them
What is capital structure? - Answer- Deciding how you will finance your long term investments,
debt or equity?
What is working capital management? - Answer- Managing your everyday financial activities
What are the three major forms of business ownership? - Answer- Sole proprietorship,
partnership, corporation
What is the least regulated form and easiest to start of business ownership? - Answer- Sole
proprietorship
Give some key characteristics of a sole proprietorship: - Answer- Unlimited liability, no double
taxation (taxed at owners personal tax rate), limited to owner's life span, hard to generate capital
Give some key characteristics of a partnership: - Answer- Two or more owners, has general and
limited partners. General have unlimited liability, limited have liability up to what they have
invested. Cannot easily raise capital.
Give some key characteristics of a corporation: - Answer- All rights of an actual person, more
regulated, double taxation, easier to raise capital, easier to start, easy to transfer ownership, not
limited to life of owners
Goals of financial management: - Answer- Survive, maximize profits, minimize costs, beat the
competition, avoid insolvency, maximize sales, maintain steady earnings growth
Financial managers are to make decisions in the best interest of the _______________________
- Answer- shareholders
