INTRODUCTION TO FINANCIAL MANAGEMENT

1. Legal Forms of Business Organization?

1.1. Sole proprietorship: Business owned by one person and operated for his or her own profit.

1.2. Partnership: Business owned by two or more people and operated for profit.

1.3. Corporation is an entity created by law. The owners of corporation are its stockholders

2. HOW TO DIFFERENTIATE?

2.1. C

2.1.1. Advantages Unlimited life Easy transfer of ownership Limited liability (losses are limited to the actual fund invested). Ease of raising capital

2.1.2. Disadvantages Double taxation – earning taxed at corporate level and then any earning paid out as dividends are taxed again as income to stockholders Cost of set-up and report filing are more complex and time consuming

2.2. P&P

2.2.1. Advantages Ease of formation Subject to few regulations No corporate income taxes

2.2.2. Disadvantages Difficult to raise capital Unlimited liability (looses that exceed the money that has been invested) Limited to the life of the individual who created it

3. FINANCE?

3.1. Science & art of managing money

4. GOAL?

4.1. Managerial Actions to Maximize Stock Price

4.2. Responsibilities to society at large

4.3. Ethics consideration

5. BY HASSHVINY D/O SUBRAMANIAM