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What is finance

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An Overview of Finance What is finance Fields and jobs in Finance Forms of business organization Responsibility of financial staff Goals of the corporation – PowerPoint PPT presentation

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Title: What is finance


1

CHAPTER 1An Overview of Finance
  • What is finance
  • Fields and jobs in Finance
  • Forms of business organization
  • Responsibility of financial staff
  • Goals of the corporation

2
What is Finance
  • Finance is the study of the flow of money
  • Borrowing and Lending
  • Financial institutions-the middle man
  • Financial markets
  • Financial instruments-standard contact of
    borrowing/lending

3
Fields and jobs in Finance
  • Money and Capital Market
  • Markets and institutions that provide short and
    long term capital Investment banks, banks,
    mutual funds, insurance companies, stockbrokers
  • Regulators Fed, SEC (security and exchange
    commission)

4
Fields and jobs in Finance
  • Investments
  • Security analysis
  • Portfolio management
  • Market analysis
  • Financial management (corporate finance)

5
Alternative Forms of Business Organization
  • Sole proprietorship
  • Partnership
  • Corporation

6
Sole Proprietorship
  • Advantages
  • Ease of formation
  • Subject to few regulations
  • No corporate income taxes
  • Disadvantages
  • Limited life
  • Unlimited liability
  • Difficult to raise capital

7
Partnership
  • A partnership has roughly the same advantages and
    disadvantages as a sole proprietorship.

8
Why corporation? disadvantages
  • Double taxation
  • Cost of set-up and report filing
  • Profit sharing

9
Advantages
  • Unlimited life
  • Easy transfer of ownership
  • Limited liability why?
  • Fairness and efficiency
  • Ease of raising capital
  • Capitalize future earnings into stock value today

10
Responsibilities of the Financial Staff
  • Investment and financing decisions
  • Forecasting and planning
  • Transactions in the financial markets
  • Managing risk (insurance, hedging)

11
Goals of the Corporation
  • The primary goal is shareholder wealth
    maximization, which translates to maximizing
    stock price.
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