ECON 4400 Chapter Notes - Chapter 1: Corporate Finance, Capital Budgeting, Double Taxation
Document Summary
Lo1 the basic types of financial management decisions and the role of the financial manager. Lo2 the financial implications of the different forms of business organization. Lo4 the conflicts of interests that can arise between managers and owners. Lo5 the roles of financial institutions and markets. Answers to concepts review and critical thinking questions. Some advantages: simpler, less regulation, the owners are also the managers. (lo2) the primary disadvantage of the corporate form is the double taxation to shareholders of distributed earnings and dividends. Some advantages include: limited liability, ease of transferability, ability to raise capital, unlimited life, and so forth. (lo4) the treasurer"s office and the controller"s office are the two primary organizational groups that report directly to the chief financial officer. The controller"s office handles cost and financial accounting, tax management, and management information systems, while the treasurer"s office is responsible for cash and credit management, capital budgeting, and financial planning.
