1.1 Finance and Business

Briefly name and describe some organizational forms other than corporations that provide owners with limited liability.

Limited Partnership (LP), S Corporation (S Corp), limited liability Company (LLC), and limited liability partnership (LLP)

Why is the study of managerial finance important to your professional life regardless of the specific area of responsibility you may have within the business firm? Why is it important to your personal life?

Managers in the firm, regardless of their job descriptions, usually have to provide financial justification for the resources they need to do their job. This is why one must be aware of managerial financing .

What is finance? Explain how this field affects all of the activities in which businesses engage.

Finance is the science and art of managing money. Because there are important financial dimensions to almost any aspect of business, this field affect all of the activities.

What is the financial services area of finance? Describe the field of managerial finance.

-Financial services is the are of finance concerned with the design and delivery of advice and financial products to individuals, businesses, and governments. -Managerial finance is concerned with the duites of the financial manager in a business. Financial Managers administer the affairs of all types of business.

Which legal form of business organization is most common? Which form is dominant in terms of business revenue?

-Sole proprietorship is the most common form of business(73%). -Corporations account for nearly 90% of total business revenues making them the dominant in terms of revenue.

Describe the roles and the basic relationship among the major parties in a corporation-stockholders, board of directors, and managers. How are corporate owners rewarded for the risk they take?

Stockholders-the owners of a corporation, whose ownership, or equity, takes the form of either common stock or preferred stock. They are rewarded through dividends or residual claimants. Board of Directors-Voted individuals who are typically responsible for approving strategic goals and plans, setting general policy, guiding corporate affairs, and approving major expenditures. Managers-Managing day-to-day operations and carrying out the policies established by the board of directors.