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Introduction to Corporate
Finance
McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
ChapterOutline
Chapter Outline
Corporate Finance and the
Financial Manager
1-5
Financial Management
Decisions
Capital budgeting
What long-term investments or
projects should the business take
on?
Capital structure
How should we pay for our assets?
Should we use debt or equity?
General
Partnership Limited
C-Corporation
S-Corporation
Corporation Limited Liability
Company (LLC)
1-7
Sole Proprietorship
Advantages:
Easiest to start
Least regulated
Single owner keeps
all the profits
Taxed once as
personal income
1-8
Sole Proprietorship
Disadvantages:
Limited to life of
owner
Equity capital
limited to owners
personal wealth
Unlimited liability
Difficult to sell
ownership interest
1-9
Partnership
Advantages:
Double taxation
(income taxed at
the corporate rate
and then dividends
taxed at the
1-13
personal rate)
Goal of Financial
Management
What should be the goal of a
corporation?
Maximize profits?
Minimize costs?
Maximize market share?
Maximize the current value of the
companys stock?
1-17
Financial Markets
1-18
Work the Web Example
The Internet provides a wealth of
information about individual companies
1-19