INDIVIDUAL ESSAY

Hình thức (nhóm / cá nhân): Cá nhân

Họ và tên: Lê Nguyễn Thanh Tâm
MSSV: 2021009775
Giảng viên: Nguyễn Xuân Dũng
Lớp / Buổi học: CLC_20DTC07 / Sáng thứ 2,4
Q1: What are the three types of financial management decisions? For each type
of decision, give an example of a business transaction that would be relevant.
There are three types of financial management decisions: Capital budgeting,
capital structure and working capital management.
 Capital budgeting (deciding whether to expand a manufacturing plant): Size,
timing and risk of future cash flows are crucial to capital planning. Capital budgeting
is essential. I received an invitation from our manager yesterday about our sand and
gravel operations, for example. He wants to purchase a new triturator (to crush stone
into gravel and sand). Ihelped evaluated him for this chance today on the return on
investment. There is a lot of effort, but in the first year of ownership, it was
established that buying the new crusher would generate another 60,000 tons of
production/sales.
 Capital structure (deciding whether to issue new equity and use the proceeds to
retire outstanding debt)
When looking at the capital structure, two primary questions
1)How many dollars do we need to acquire in order to acquire this asset?
2) What are the company's least priced funds?
For example, when we plan to purchase this new crucible, we will decide how
this new machine will be available. In this case, we have concluded that we are
cutting the job a bit and could afford the new equipment in other areas. We do not
take loans to acquire long-term assets as to where the money comes from. We borrow
and pay overtime from our firm.
 Working capital management (modifying the firm's credit collection policy
with its customers) refers to a firm's short-term assets, such as inventory, and its
short-term liabilities, such as money owed to suppliers. This is more of an everyday
activity. For example, we just converted to a new ticketing system at work.
Q2: What are the four primary disadvantages of the sole proprietorship and
partnership forms of business organization? What benefits are there to these
types of business organization as opposed to the corporate form?
Four primary disadvantages of the sole proprietorship and partnership forms of
business organization: limitless responsibility, restricted living conditions, difficulties
in transfer of ownership, trouble collecting payments.
Certain benefits: The owners are also managers; personal tax rates are
sometimes better than corporation tax rates.
Q3: What is the primary disadvantage of the corporate form of organization?
Name at least two advantages of corporate organization.
The corporation organization's major drawback is the double taxation of the
dispersed income and dividends to shareholders. Some of the benefits include
limiting liabilities, easy transferability, money raising capability and limitless living
conditions.
Q4: In a large corporation, what are the two distinct groups that report to the
chief financial officer? Which group is the focus of corporate finance?
The Office of the Treasurer and the office of the Controller are the two major
organizational entities reporting directly to the CFO. The Office of Controllers
manages the cost and financial, tax and IS management of cash and credit
management, the capital budgeting and the financial planning of the tricorner's
offices. The corp finanxce research is consequently centered within the duties of the
treasury group.
Q5: What goal should always motivate the actions of a firm’s financial
manager?
Maximizing the company's existing market worth (share price) (whether its
publicly traded or not)
Q6: Who owns a corporation? Describe the process whereby the owners control
the firm’s management. What is the main reason that an agency relationship
exists in the corporate form of organization? In this context, what kinds of
problems can arise?
The shareholders are the owners of the company in the corporate form of
ownership. The shareholders elect the corporate directors who, in turn, choose the
management of the business. This separation in corporate form of organization of
ownership from control is what makes agency difficulties exist. Management may
behave itself, and not in the interests of shareholders, or someone else's best interests.
When success occurrences occur, the aim of boosting the firm's share price may be
contradicted.