The Importance Of Corporate Finance For Managers

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Unit One Assignment This paper focuses on the unit one assignment for GB550: Financial Management. This case study focuses on the United States (U.S.) financial system. A series of questions have been developed in order to explain this system to a client looking to start a new apparel company and possibly invest through the company she is seeking advice from. Importance of Corporate Finance for Managers Firms entrust managers to make decisions that will secure the company’s future by maximizing profits and ensure customer satisfaction. Corporate finance is important to mangers due to the opportunities and risk it represents for them as professionals. Corporate finance provides managers with the skills and information necessary to add…show more content…
A proprietorship is an unincorporated business owned by an individual (Brigham and Ehrhardt (2005). This is the easiest business form to start as it and according to Brigham and Ehrhardt (2005), there are three important advantages to this organizational form: “(1) it is easy and inexpensively formed, (2) it is subject to few government regulations, and (3) its income is not subject to corporate taxation (p. 6 para. 2)” Many businesses start up as a proprietorship and as business grows, they change their organizational form. While a proprietorship offers many advantages for an individual wanting to start his or her own business, this organizational forms is subject to a few disadvantages. The first disadvantage is that there is unlimited personal liability. Since there is no distinction between business and individual, any assets owned by either are financially at risk (Truex, n.d.). The second disadvantage is the limited availability to raise capital (Truex, n.d.). “Sole proprietorships are unable to sell interest or shares in the business as a means of raising money (Truex, n.d. para. 3).” The third disadvantage is that the owner lay lack expertise and thus, have less growth potential. Lastly, there is limited life expectancy due to the business being closely tied to the owner. In these cases, businesses may not survive the lost of an owner due to illness or death (Truex, n.d). “A partnership exist when two or more
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