Managerial Finance

Satisfactory Essays
The financial activities regard running a corporation. In other words, Corporate Finance is mainly concerned with maximizing shareholder value through long-term as well as short-term financial planning along with the implementation of different strategies. Thus, this includes everything from capital investment decisions to investment banking falls under the domain of corporate finance.

On the other hand, the shareholders own a corporation or you could say corporations are owned by its stockholders. This could range from a single shareholder in a closely held corporation to hundreds of thousands of shareholders in a publicly traded organization.

Furthermore, some of the key terms that associated with Corporate or Managerial finance would be Liability - financial claims towards an organization assets which is not consider equity, Cash flows which consider money moving through companies, Corporation which is a distinct legal entity and Assets that could help the business in return.

In addition, three main concerns are Capital Budgeting which is the process by which the firm decides which long-term investments to make. Next, Capital Structure which represents the proportions of the firm’s financing from current and long-term debt and equity. Lastly, Net working capital which considers short-term management of assets and liabilities.

References

Ross, Westerfield, & Jaffe. (2013). Corporate Finance. New York: McGraw-Hill Irwin.

Can the goal of maximizing the value of the stock conflict with other goals, such as avoiding unethical or illegal behavior?

All public organizations have a goal of maximizing shareholder value. However, if they did not, they would more than likely not be in business for a long period of time. A lot of the huge accounting frauds that we heard about throughout the years started due to management gets nervous about shareholder value. Management sees that the return is less than expected, and start to think of ways



References: Ross, S., Westerfield, R. & Jaffe, J. (2013). Corporate Finance.(10th ed). New York: McGraw- Hill Irwin.

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Answer: In the corporate form of ownership, the shareholders are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm's management.…

    • 479 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    Fin 331 Study Guide

    • 5260 Words
    • 22 Pages

    * The primary financial goal of management is shareholder wealth maximization, which translates to maximizing stock price.…

    • 5260 Words
    • 22 Pages
    Powerful Essays
  • Better Essays

    Fin515 Week 1 Homework

    • 1441 Words
    • 6 Pages

    Corporate finance is important to all managers regardless of the industry they are in due to the fact that it deals with the strategic financial issues associated with achieving goals such as how the corporations should raise and manage its capital , what investments the firm should make, what portion of profits should be returned to shareholders in the form of dividends, and whether it makes sense to make further investments such as merging with or acquiring another company.…

    • 1441 Words
    • 6 Pages
    Better Essays
  • Satisfactory Essays

    Mini Case

    • 306 Words
    • 2 Pages

    Corporate Finance is the specific area of finance dealing with the financial decisions corporations make, and the tools and analysis used to make the decisions. Corporate finance is important to all managers because managers must make very important decisions that will direct the future of their businesses. Most of these decisions will be made, based on the analysis of its financial status.…

    • 306 Words
    • 2 Pages
    Satisfactory Essays
  • Powerful Essays

    CORRECT A way of aligning management goals to shareholder’s interest is to tie managerial compensation to the market value of the firm’s stock.…

    • 892 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    References: Parino, R., Kidwell, D.S., & Bates, T.W. (2012). Fundamentals of Corporate Finance (2nd ed.). Hoboken, NJ: John Wiley & Sons, Inc…

    • 708 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Managerial Finance

    • 1271 Words
    • 6 Pages

    4. As a general rule, a company's debentures have higher required interest rates than its mortgage bonds because mortgage bonds are backed by specific assets while debentures are unsecured.…

    • 1271 Words
    • 6 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Managerial Finance

    • 1001 Words
    • 5 Pages

    Heath Foods’s bonds has 7 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield? 8.55%…

    • 1001 Words
    • 5 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Cost of Capital FIN 571

    • 455 Words
    • 2 Pages

    References: Parrino, R., Kidwell, D. S, & Bates, T. W. (2012). Fundamentals of corporate finance (2nd ed). Hoboken, NJ: Wiley…

    • 455 Words
    • 2 Pages
    Satisfactory Essays
  • Best Essays

    Ross, S. A., Westerfield, R. W., & Jaffe, J. (2010). Corporate Finance (9th ed.). New York: McGraw-Hill Irwin.…

    • 4477 Words
    • 18 Pages
    Best Essays
  • Good Essays

    Fi 515 Week 1

    • 1137 Words
    • 5 Pages

    Corporate finance is important because of the skills that mangers can obtain from it. Some of these skills are selecting the best corporate strategies and projects that add value to business.…

    • 1137 Words
    • 5 Pages
    Good Essays
  • Good Essays

    Fin515 Week 1

    • 1390 Words
    • 6 Pages

    Corporate finance is important to all managers because you need to be aware of the tools needed to evaluate the firm’s value and be able to accurately make decisions to maximize wealth.…

    • 1390 Words
    • 6 Pages
    Good Essays
  • Better Essays

    Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2011). Essentials of corporate finance. New York: McGraw-Hill/Irwin.…

    • 1053 Words
    • 4 Pages
    Better Essays
  • Good Essays

    505 Quiz 1

    • 852 Words
    • 3 Pages

    Management’s primary goal is to the shareholder’s wealth maximization, which translates into maximizing the value of the company as measured by the price of the company’s common stock. This goal can be achieved by giving the shareholders a “fair” payment on their investments.…

    • 852 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Dean Foods Case Study

    • 265 Words
    • 2 Pages

    “The Company's primary objective is to maximize long-term stockholder value, while adhering to the laws of the jurisdictions in which it operates and at all times observing the highest ethical standards.”…

    • 265 Words
    • 2 Pages
    Good Essays