GB 550 Financial Management Unit 1 Assignment

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School

West Los Angeles College *

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FINANCIAL

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Finance

Date

Feb 20, 2024

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docx

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Uploaded by kmays1984

Purdue Global University GB 550 Financial Management Unit 1 Assignment Krystal Mays

I recently obtained my master's degree in finance from Purdue Global University. I recently began working at the investment firm Harvey, Pearson & Litt. Sofia Matias is a new customer that we recently signed. Spanish tennis player Sofia Matias has moved to the United States from her native Chile. After a highly successful tennis career, Sofia hopes to launch her own clothing company in the future. Sofia wants to sell the clothing that she creates. Sofia wants to use Harvey, Pearson & Litt to make financial investments as well. I'll respond to some of Sofia's inquiries so she can learn more about the US financial system. 1. Why is corporate finance important to all managers? "Corporate finance" refers to the area of finance that studies a company's capital structure and funding sources. Understanding "corporate finance" is essential for managers since it helps with funding, investment, and profit-sharing decisions. Corporate finance knowledge, for example, will help a manager make decisions that maximize the organization's return on investment. Understanding "corporate finance" can also help management spot profitable prospects and areas where the company is willing to take chances. 2. 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 three main forms of business organization are as follows: 1. Sole Proprietorship 2. Partnership 3. Corporations A sole proprietorship is a business that has a single owner who also acts as its operator. A sole proprietorship has several benefits, one of which being that it's the simplest form of business formation. You have complete managerial control and there aren't many laws or regulations from the government. Finally, since you have complete control, the business and the owner are one and the same legally, so you keep all the earnings. The disadvantage of a sole proprietorship is that you assume full legal liability and there is a limitation to the capital available as your using your own resources. Owners are unable to raise money by selling interests in or shares of their company. Lastly, Sole proprietorships are unable to easily transfer any intangible assets from one owner to another without the need for a distinct legal identity. The owner has an intrinsic stake in the business, aside from fixed assets and equipment.

A partnership is a business when two or more parties come together for business ownership. When it comes to a partnership there are many advantages such as there is no business taxes. Partnerships are exempt from business income tax, but they are required to report to the IRS information on their yearly financial performance, including revenue, profits, losses, gains, etc. There is less financial burden with a partnership. Because the risk is shared among partners, the company's ability to borrow money is increased when it has numerous partners. Credit is more likely to be extended to partnerships by banks and other financial institutions than to single proprietorships. Lastly there are increased business opportunities when it comes to a business partnership. You will have access to more funding and cash flow for your business with a partnership. While there are positives there are some negatives such as increased liability, less autonomy and also complications with future sales. 3. A corporation is a business that is acknowledged by the state as existing independently of its owners, or shareholders. The buying and selling of shares by individuals, organizations, or both makes it simple to transfer a firm. One of the numerous benefits of becoming a business is the protection it offers from personal liability. Almost limitless funds are at your disposal. There are significant tax advantages as well as corporate security. The long application process, double taxation, high costs, and finally, following rules and regulations are the drawbacks. How do corporations go public and continue to grow? a. What are agency problems? b. What is corporate governance? When a business goes public, it sells its first batch of shares to the general public. As the business expands, it may also issue more debt or stock. When a company's managers act against the interests of the shareholders in favor of their own, it can lead to an agency problem. The set of guidelines that governs how an organization acts toward its directors, managers, workers, creditors, shareholders, clients, rivals, and the community is known as corporate governance. 4. What should be the primary objective of managers? A manager's main goal is to add value to the organization, add value to the stakeholders, and take excellent care of it. 1. Do firms have any responsibilities to society at large? It is the ethical duty of all businesses to create a safe and healthy work environment free from hazards and things that might harm employees. Additionally, organizations must protect the community's natural resources from contaminants as well as other hazardous byproducts.

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Related Questions

Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle DellaTorre, a professional tennis player who has just come to the United States from Chile. DellaTorre is a highly ranked tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. DellaTorre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to explain the U.S. financial system to DellaTorre. Why is corporate finance important to all managers? 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. How do corporations go public and continue to grow? What are agency problems?…

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