财务管理复习资料整理Foundations of Financial Management.docxVIP

Foundations of Financial ManagementChapter 1 The Goals and Functions of Financial ManagementI. Financial Manager Functions1. Financial ManagerFinancial managers try to answer some or all of these questions: Capital budgeting；Capital structure；Working capital management2. Functions of Financial Management It is the responsibility of financial manager -to allocate funds to current and fixed assets-to obtain the best mix of financing alternatives-to develop an appropriate dividend policy within the context of the firm’s objectivesII. Goal of Financial Management1. Forms of OrganizationThree major forms in the united states: Sole proprietorship, Partnership, Corporation(1). Sole ProprietorshipAdvantages: Easiest to start; Least regulated; Single owner keeps all the profits; Taxed once as personal income;Disadvantages: Limited to life of owner; Equity capital limited to owner’s personal wealth;Unlimited liability; Difficult to sell ownership interest;(2). PartnershipAdvantages: Two or more owners; More capital available; Relatively easy to start; Income taxed once as personal income;Disadvantages: Unlimited liability; General partnership; Limited partnership;Partnership dissolves when one partner dies or wishes to sell; Difficult to transfer ownership;(3). CorporationAdvantages: Limited liability; Unlimited life; Separation of ownership and management;Transfer of ownership is easy; Easier to raise capital;Disadvantages: Separation of ownership and management; Double taxation (income taxed at the corporate rate and then dividends taxed at personal rate);2. Goals of Financial ManagementProfit MaximizationThere are some serious drawbacks (缺陷)to profit maximization as the primary goal of the firm.A change in profit may also represent a change in risk.The goal of maximizing profit fails to consider the timing of the benefits.The goal of maximizing profit suffers the impossible task of accurately measuring the profit.Maximizing Shareholder WealthShare holders are the owners o