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The aim of Corporate Fina is provide key skills and concepts which can help financial managers to make sound business decisions like for instance knowing the financial implications for different types of business organizations, understand the various forms of financial markets and ascertain the goals of financial management. In order to have a good understanding of corporate finance, financial managers have a role of ascertaining the long-term investments that should be taken by a particular company, the source of financing for the long term investment taken by the company and the management of its financial activities.
The Chief Financial Officer within any organization in most circumstances tasked with the responsibilities of being both a treasurer and financial controller for the organization. Some of the most common Financial Management decisions includes matters to do with the capital budgeting, capital structure and the working capital management for a given business enterprise.
In the United States, there exist three major forms of business organizations namely the Sole Proprietorship, partnership which can either be limited or general and Corporation. Sole proprietorship is advantageous because it is easy to start, owner keeps all profits, taxation is once and it is normally less regulated. However, it is disadvantageous in that it is unlimited liability, limited to the life of the business owner and it is hard to sell ownership interest. The major objectives or aims of any financial management should therefore be to maximize profit, minimize the costs maximize the market share and maximize the current value for the organization’s stock. In order to have proper management of the managers, then corporate control through threats of takeover, managerial compensation and involvement of other stakeholders should be given priority (eCornell, 2011).
In order to obtain information regarding individual companies, the internet is a great source of such information like for instance a site like finance.yahoo.com. In a dealer market, dealers are normally assigned for specific securities and they are capable of creating liquidity markets through the purchase and sale against their personal inventory. An auction Market on the other hand refers to a market in which the buyers and sellers enter into competitive bids at the same time. The highest price which a buyer is capable of paying and the lowest price a seller is willing to sell is thus reflected through a price stock which is traded. Listed securities are normally preferred by investors as opposed to over the counter market because their prices can be accurately and transparently be ascertained.
In any business enterprise, the Balance sheet, the Income Statement, the Cash flow and Taxes are important documents of a business enterprise. The Balance Sheet is important in that it presents a snapshot of a company’s liabilities and assets at any given time. The identity of a Balance sheet is thus given as, Assets=Liabilities + Equity of the Stockholders. The Net Working Capital for any given business enterprise is normally healthy when the cash to be received in a year exceeds the cash to be paid out and it is normally obtained through subtracting the current liabilities from the current assets. The Balance sheet is thus responsible for provision of a company’s. Liabilities, value of its assets and its equity.
The Income Statement is also a vital component for any given company because it presents the operations of any given company at a specified time period. Revenues are normally reported first then expenses for the particular period are deducted. By law, any publicly traded company ought to file regular reports with the United States Securities and Exchange Commission and this is done electronically. Taxes are reliable in that they are always ever changing and the most common ones are the marginal and average tax rates. One of the most important pieces of information that can be derived from the financial statements by a financial manager is the cash flow. The cash flow is vital in that it presents a financial manager with information regarding how the cash is generated through the utilization of assets and how they are paid to whoever finances the purchasing of assets.
Ratio analysis on the other hand provides for better comparison between various companies through time and they are used both externally and internally. Financial ratios are normally categorized through long term solvency, short term solvency, turnover ratios, market value ratios and profitability ratios. Financial statements are normally meant for both external and internal uses.