Fi 515 Week 1
Mini case p.45
a. Why is corporate finance important to all managers?
Corporate finance is important because of the skills that mangers can obtain from it. Some of these skills are selecting the best corporate strategies and projects that add value to business.
b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.
The organizational forms are proprietorships, partnerships, and corporations.
Advantages of proprietorships are that they in cheaper to start up, they have few government regulations, and no corporate income tax. Some disadvantages are they often acquire a lot of debt and are limited to last only as long as the person who created it.
Advantages of a partnership are they are cheap and easy to start. Some disadvantages are they are have a short life span, and they can be difficult to transfer ownership.
Advantages of corporations are that they have unlimited life span, ownership interest is easily transferred, and they have a limited amount of liability. Some disadvantages are earnings can be double taxed and setting up a corporation requires completing diffucult state and federal reports.
c. How do corporations go public and continue to grow? What are agency problems? What is corporate governance?
A company goes public when it sells stock to the public. One problem that may happened is the corporation will begin to do business that helps itself better that the shareholders.
d. What should be the primary objective of managers?
The corporation’s primary goal is stockholder wealth maximization, which translates to maximizing the price of the firm’s common stock.
1. Do firms have any responsibilities to society at large?
Yes, firms should provide a safe working environment for employees, strive to be green, and to produce safe products.
2. Is stock private maximization good or bad for society?
Stock price
a. Why is corporate finance important to all managers?
Corporate finance is important because of the skills that mangers can obtain from it. Some of these skills are selecting the best corporate strategies and projects that add value to business.
b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.
The organizational forms are proprietorships, partnerships, and corporations.
Advantages of proprietorships are that they in cheaper to start up, they have few government regulations, and no corporate income tax. Some disadvantages are they often acquire a lot of debt and are limited to last only as long as the person who created it.
Advantages of a partnership are they are cheap and easy to start. Some disadvantages are they are have a short life span, and they can be difficult to transfer ownership.
Advantages of corporations are that they have unlimited life span, ownership interest is easily transferred, and they have a limited amount of liability. Some disadvantages are earnings can be double taxed and setting up a corporation requires completing diffucult state and federal reports.
c. How do corporations go public and continue to grow? What are agency problems? What is corporate governance?
A company goes public when it sells stock to the public. One problem that may happened is the corporation will begin to do business that helps itself better that the shareholders.
d. What should be the primary objective of managers?
The corporation’s primary goal is stockholder wealth maximization, which translates to maximizing the price of the firm’s common stock.
1. Do firms have any responsibilities to society at large?
Yes, firms should provide a safe working environment for employees, strive to be green, and to produce safe products.
2. Is stock private maximization good or bad for society?
Stock price