[FIN 300] - Midterm Exam Guide - Ultimate 12 pages long Study Guide!
Document Summary
What long-term investments should you take on: capital budgeting plan and manage companies" long term investments. This decision determines how the company will get money. How will you manage day-to-day financial activities: working capital management deals with managing the company"s current assets and current liabilities. Options, futures, and other securities whose value derives from the price of another, underlying, asset. One individual (two or more people) own and manage the business. Bears all the costs, but keeps all the net profits. No separation of business and individual (partners) Advantages: ease of establishment and lack of regulation. Advantages: limited liability (financial and legal), more flexible and permanent (managers and shareholders come and go, firm remains) Disadvantages: double taxation, taxation (firm profits and dividends to tax payers), agency issues, regulations and costs. The goal of any corporation is to maximize shareholder wealth.
