Investment and Financing Decisions
-Investment Decisions can also be called gravid budgeting or detonator expenditure decisions.
- Two major prudence decisions are what to invest in and how to pay for it.
-Financial managers are non the only ones that make investment decisions. Many key employees from discordant departments in a corporation take part in the decisions.
What is a Corporation?
-Corporations have most of the rights of an individual. Corporations are owned by shareholders, but shareholders have limited liability so they arent trustworthy for a corporations debt.
-The eccentric of the Financial Manager
-Deals with investors and helps with managing the firms operations.
- oral sex financial officer responsible for managing the financial risks of the corporation and oversees the work of all the financial staff.
-Treasurer In charge of short term financing transactions, maintenance, and disbursement of funds.
-Controller- Chief accountant that oversees financial statements and tax returns.
The Investment Trade-off
-Corporations must nail down to invest in labor movements or pay out capital to its shareholders. If the rate of return is higher on the investment project rather than on what shareholders can gain on their own, shareholders would aim to support the project.
If the corporation does invest cash into the project, the shareholders lose the hazard to invest the money on their own. The opportunity cost of capital is the return that the shareholders are giving up.
Goals of the Corporation
-Corporations want to maximize shareholders wealth while remaining ethical.
-Keep all stakeholders happy and grow their business.
incorporate Governance
-Ensures that corporate managers pretty much treat the value of shareholders as if it were their own money at risk.
-Board of directors represent shareholders and more than one-half of the directors can not be associated with management.
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