LN01Brooks671956 02 LN01
LN01Brooks671956 02 LN01
LN01Brooks671956 02 LN01
Financial Management
Learning Objectives
1. Describe the cycle of money, the participants in the cycle, and the common objective of borrowing and lending. 2. Distinguish the four main areas of finance and briefly explain the financial activities that each encompasses. 3. Explain the different ways of classifying financial markets. 4. Discuss the three main categories of financial management. 5. Identify the main objective of the financial manager and how that objective might be achieved.
1-2
Learning Objectives(continued)
6. Explain how the finance manager interacts with both internal and external players. 7. Delineate the main types of business organizations and their respective advantages and disadvantages.
1-3
Definition of Finance:
Finance is the art and science of managing wealth.
It is about making decisions regarding what assets to buy/sell and when to buy/sell these assets. Its main objective is to make individuals and their businesses better off.
What are the assets? Lewis Enterprise in Pretty Woman Romneys Bain Capital
1-4 2013 Pearson Education, Inc. All rights reserved.
1-5
1-6
1-7
1-8
1-9
Nature of transaction
dealer markets auction markets
1-10
1-11
1-12
1-13
1-14
1-15
Besides these 3 main forms some other forms of business organizations include:
Hybrid Corporations Not-for-Profit Corporations
1-16 2013 Pearson Education, Inc. All rights reserved.
Disadvantages
1. Owner pays personal tax rate on profits 2. Obligations of the business are sole responsibility of owner, and personal assets may be necessary to pay obligations (personal and business assets are commingled). 3. Business entity limited to life of owner. 4. Can have limited access to outside funding for the business.
1-17
1-18
1-20
1-21
1-22