When the business. When there are partners

When
it comes to corporate finance, it explains so much about the financial aspects
of the business. It gives you an idea of what type of approach you will take
towards the business as well as what type of funds it will take to access
projects and things of that nature. When starting up a major corporation, there
are three organizational forms. Sole proprietorship means that a person has the
authority to make all the decisions and run their business however they want
without having to discuss anything with anyone. However, a sole proprietor is
responsible for all finances and debts that are created. If you have employees,
you are held responsible for them as well. When it comes to partnership, both
parties are responsible for the business. When there are partners in a
business, you have two ideas, more funds, and things are a lot stressful than
dealing with on one person. There could be problems with partnership if both
parties can’t agree on things and one partner doesn’t want to do their part
with the finances or other business functions. (chapter 1 pages 7& 8)  Corporation is formed from shareholders and
their only liable for their shares in the company. The financial things that
may occur on the corporation behalf, isn’t their responsibility. Forming a corporation
takes a lot of time and money because it’s a big establishment and something
that can’t be done in a week or so. Corporations grow by making the value of
the company worth something. This makes other share holders interested in the
company. Problems occur when managers decides to make their own calls on things
in the business that may not be in the best interest of the share holders. Corporate
governance is basically the rules that govern the way a company is manage and
ran.  Managers’ primary objectives are to
maximize the profits. (Page 11)  Firms have
a great deal of responsibility when it comes to society. Stock prize
maximization could be good or bad depending on how the market is. The stock markets
fluctuate. Sales, operating costs, taxes are three aspects of cash flows. (Page
15) The weighted average cost of capital is the amount share holders may be
required to put back in the business. When the business is able to profit more
than its spend over time, this makes the value of the company better.