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FUNDAMENTALS OF CORPORATE FINANCE EXAM FULLY COVERED -10
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FUNDAMENTALS OF CORPORATE FINANCE EXAM FULLY COVERED -10
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FUNDAMENTALS OF CORPORATE FINANCE EXAM FULLY COVERED #101. Corporate finance: 3. What long-term investments should you take on
2. Where will you get the long-term financing to pay for your investment?
3. How will you manage your everyday financial activities, such as collecting from customers
and paying suppliers?
2. Financial Management Decisions: capital budgeting, capital structure, working capital
management
3. Capital budgeting: What long-term investments orprojects should the business take on?
4. Capital structure: How should we pay for our assets?
• Should we use debt or equity
5. Working capital management: How do we manage the day-to-dayfinances of the firm?
6. Three different legal forms of business organization exist: 1. Sole proprietor- ship
2. Partnership
3. Corporation
7. Sole Proprietorship: A business owned by one person
Someone who is just starting out and deciding if entrepreneurship is the right course
Someone who isn't too concerned about liability and separating themselves from the business
8. Sole Proprietorship Advantages: Simplest type of business to start
Least regulated form of organization Owner
keeps all the profits
9. Sole Proprietorship Disadvantages: Owner has unlimited liability for business debts
All business income is taxed as personal income
Life of sole proprietorship is limited to owner's life span
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, FUNDAMENTALS OF CORPORATE FINANCE EXAM FULLY COVERED #10
Amount of equity that can be raised is limited to the amount of the proprietor's personal wealth
Ownership may be difficult to transfer
10.A partnership: a business organization owned by two or more persons who agree on a
specific division of responsibilities and profits
11.Who Should Form a Partnership?: A general partnership is the ideal business ownership type
for:
2 people going into business together who want to keept hings simple
Business partners who aren't concerned about liability or keeping themselves sep- arate from th
business
12.Advantages of a partnership: same as sole Proprietorship
13.Disadvantages of a partnership: Unlimited liability for business debts on the part of the
owners
Limited life of the business Difficulty of
transferring ownership
14.Downsides of Sole propoertorship: Business owner and partnerships are not separate entities
if someone sues they are suing the owner or owners personally, and their personal assets are at
risk
15.LLC (Limited Liability Company): A limited liability company or LLC puts some separation
between you and your business by removing personal liability
16.Advanatges of a LLC: if you're sued or can't pay business debts, your personal assets may
be protected
offers complete or limited personal liability protection
An LLC has significantly less paperwork and formalities than a corporation.
17. Who Should Form an LLC?: Someone who likes the security of separating their personal and
business assets
Someone who prefers minimal formalities and paperwork
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