CFFM8 PPT ch01

Eugene F. Brigham & Joel F. Houston

Fundamentals of Financial
Management Concise 8E

2-1
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part.

INTRO

ORGANIZATION

CREATING VALUE

STK-MGR
CONFLICTS

STK-DBT
CONFLICTS

BAL INTERESTS

Chapter 1

An Overview of Financial
Management
Forms of Business Organization
Creating Value for Investors
Stockholder-Manager Conflicts
Stockholder-Debtholder Conflicts
Balancing Shareholder Interests and Society Interests
1-2
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part.

INTRO

ORGANIZATION

CREATING VALUE

STK-MGR
CONFLICTS

STK-DBT
CONFLICTS

BAL INTERESTS

Finance Within the Organization

Board of Directors

Chief Executive Officer (CEO)

Chief Operating Officer (COO)

Chief Financial Officer (CFO)

Marketing, Production, Human
Resources, and Other Operating
Departments

Accounting, Treasury, Credit, Legal,
Capital Budgeting, and Investor
Relations
1-3

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part.

INTRO

ORGANIZATION

CREATING VALUE

STK-MGR
CONFLICTS

STK-DBT
CONFLICTS

BAL INTERESTS

Forms of Business Organization

•
•
•

Proprietorship
Partnership
Corporation

1-4
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part.

INTRO

ORGANIZATION

CREATING VALUE

STK-MGR
CONFLICTS

STK-DBT
CONFLICTS

BAL INTERESTS

Proprietorships and Partnerships

•

Advantages

 Ease of formation
 Subject to few regulations
 No corporate income taxes

•

Disadvantages

 Difficult to raise capital
 Unlimited liability
 Limited life

•

Often set up through LLCs/LLPs.

1-5

© 2015 Cengage Learning. All Rights Reserved. May not be