Financial Administration -part 2-
Financial managers make decisions about the assets to be acquired by their companies, how they are financed and how the organization should manage to achieve the maximization of corporate value in the market and the general welfare.
1) .- Natural persons is a business run by one owner, it is easily and cheaply, has many governmental restrictions and subject to the payment of income tax. It is limited by being unable to obtain large sums of capital, has unlimited liability for business debts and risks, and their business is limited to the longevity of the individual.
2) Partnerships .- Two or more people manage the corporate business nature, the advantages is that they are rapidly forming, low-cost and disadvantages are equal to those of individuals and difficulty of transferring the property generates a lack of large sums of capital.
3) Corporations .- This is a legal entity created by a state, is autonomous and distinct from its creators have unlimited life, is easy to transfer title to their land and have limited liability, produce large amounts of capital, and as disadvantages we have earnings that are subject to double taxation, many procedures require the establishment.
The lower the risk of a company the greater its value.
The value of a company is subject to its growth opportunities
The value of an asset depends on its liquidity
Should pay more taxes.
The financial manager is responsible for the cash and marketable securities of the company, planning its capital structure, the sale of shares and bonds to raise capital, where the main goal is the maximization of shareholder wealth or maximizations common stock coupled with the social benefit.
The ethics of a company is the attitude and conduct of a company to its employees, shareholders, community, customers, etc. Deal fairly and honestly
The leveraged corporate takeover occurs when the administration hired a line of credit, made a formal offer to buy direct or actions that are not yet owned by the management group and privatized the company, these leveraged buyouts is a problem of delegation of authority between shareholders and managers.
The creditors are those who provide funds for the firm at interest rates based on the risk of the assets of the company, expectations of risk with the acquisition of assets, capital structure at the firm (amount of debt financing using ), expectations to changes in capital structure. These factors determine the risk of the debt of a company and the larger the use of debt, higher cereal danger of falling into bankruptcy.
The External Environment
Management operations affect the value of the shares of the company, but also external factors also influence prices and the expected profitability of the company, the opportunity to cash flows, dividends to shareholders, the risk of profits and dividends projected, factors such as legal restrictions, the level of economic activity, tax provisions and conditions of the stock market.
credit to: Enrique Macías García
image source: www.backofficeteam.hu/img/webkep/administration.jpg