Chapter you Overview of Financial Management & Environment

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 Chapter one particular Overview of Financial Management  Environment Dissertation


Overview of Economic Management & Environment


Overview of Financial Management

Part of financial managing Forms of organization organization Goals of the company Agency interactions


All Successful Firms Accomplish two Goals

They will identify, make, & deliver products or services that are highly valued This happens only if the firm provides more value than its competition (in the proper execution of possibly lower prices or perhaps better products)

They sell by prices high enough to cover costs and to make up owners and creditors because of their exposure to risk The profit must be high enough to adequately 1-3 compensate shareholders

3 Key Attributes to be successful

1 . installment payments on your

Skilled People at all levels

Leaders, managers and work force

Strong Associations with organizations outside the firm

Successful corporations develop win win relationships with suppliers, whom then deliver high-quality supplies on time including a reasonable cost


Enough Capital to execute their very own plans & support operations 1-4

three or more Key Attributes for Success

three or more.

Enough Capital to implement their strategies & support operations

Additional need money to purchase terrain, buildings, equipment, and supplies Companies may reinvest a part of their earnings, but most must also increase additional funds externally, by simply some mix of selling inventory and/or asking for in the economic markets 1-5

3 questions Financial Management must response

What causes a firm to have a particular stock value? How can managers make options that add value with their companies? Just how can managers make sure that their companies don't be used up of cash when executing all their plans? 1-6

5 Major Activities of Financial Management

Money Management Decrease Cost of Capital Strategic Investment (Capital Budgeting) Allocation of Income (Dividends vs . Stored Earnings) Risikomanagement 1-7

Substitute Forms of Organization Organization

Singular proprietorship Collaboration Corporation


Factors to consider

Ease of formation Taxation Liability of owners Life of enterprise Ease/difficulty of elevating capital Copy of possession 1-9

Single Proprietorship

Unincorporated business owned or operated by one person (1 owner) Advantages: Conveniently and cheaply formed Susceptible to few regulations Its income is certainly not subject to company taxation but it really is taxed only as part of the proprietor's income


Sole Proprietorship


Difficult to raise capital

It is difficult for the single owner to obtain the capital needed for progress

Unlimited responsibility

The proprietor has unrestricted personal responsibility for their debts

Limited life

The life of a proprietorship is limited towards the life of its founder

Used mainly for smaller businesses



More than you owner Is available whenever several persons affiliate to perform a business to get profit Collaboration agreements Formal or relaxed Define the ways any revenue and deficits are distributed between associates 1-12


Major advantage

Its inexpensive and easy formation

Partnership's income is not susceptible to corporate taxation but can be taxed only as a part of the partner's personal income




Unlimited responsibility Limited lifestyle of the organization Difficulty transferring ownership Problems raising considerable amounts of capital

Regarding liability

The lovers can potentially shed all of their personal assets, actually assets not invested in the company Under collaboration law, every single partner is liable for 1-14 the business's bills


It will be easy to limit the financial obligations of some of the partners by establishing a restricted partnership Particular partners happen to be designated standard partners and others limited companions Limited lovers are accountable only for how much their expense in the partnership Limited partners typically have no control General partners have got unlimited legal responsibility 1-15


In equally regular and limited relationship, at least one...