Finance Exam 1

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  1. Chief Financial Officer (CFO)
    top financial manager in a firm
  2. treasurer
    overseas cash expenditures, credit management, capital expenditures, and financial planning
  3. controller
    overseas taxes, cost accounting, financial accounting, and data processing
  4. Capital budgeting decision
    What long-term investments or projects should the business take on?
  5. Capital structure decisions
    How should we pay for our assets? Should we use debt or equity?
  6. Working capital management decision
    How do we manage the day-to-day finances of the firm?
  7. Proprietorship
    • single taxation
    • simple, cheap
    • live with owner (limited life, transferability)
    • Unlimited liability
  8. Partnership
    • Single taxation
    • Fairly cheap
    • Live with owners
    • Some may have separation (LPs), limited liability
    • Unlimited liability for GPs
  9. Advantages of corporations
    • Limited liability
    • Unlimited life
    • transfer of ownership is easy (NYSE)
    • Separation of ownership and management
    • Easier to raise capital
  10. Disadvantages of corporations
    • More costly to set up
    • Separation of ownership and management
    • Double taxation (income taxed at the corporate rate and then dividends taxed at personal rate)
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Finance Exam 1
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