FIN 3320 Chapter Notes - Chapter 1: Sole Proprietorship, Capital Structure, Financial Statement
Document Summary
The basic types of financial management decisions and the role of the financial manager. The financial implications of the different forms of business organization. The conflicts of interest that can arise between managers and owners. Treasurer handles the financing measures, investing, etc . Capital budgeting the process of planning and managing a firm"s long-term investments: exm. Capital structure mixture of long-term debt and equity the firm uses to finance its operations: exm. How much should the firm borrow and what mixture of debt and equity is best: how to fund the firm. How much cash and inventory should we keep onhand: exm. The goal of financial management is to maximize the current value per share. The agency problem and control of the corporation. Relationship between stockholders an management is called agency relationship. Agent"s incentive is his own and not get the most money. Management goals: agency cost refers to the costs of the conflict of interest between stockholders and management.
