32 Chapter 1 An Overview of Financial Management and the Financial Environment

governance, which has a direct effect on how much value companies create for their shareholders. Part 5 discusses basic corporate financing decisions, including capital structure choices (decision of how much debt versus equity the firm should use) and distribution policy (how much free cash flow should be paid out to shareholders, either as dividends or share repurchases). In Part 6, we address special topics that draw on the earlier chapters, including working capital management, risk management, bankruptcies, mergers, and multinational financial management.

e-Resources
The textbooks Web site contains several types of files: 1. It contains Excel files, called Tool Kits, that provide well-documented models for almost all of the texts calculations. Not only will these Tool Kits help you with this finance course, but they will serve as tool kits for you in other courses and in your career. 2. There are problems at the end of the chapters that require spreadsheets, and the Web site contains the models you will need to begin work on these problems. When we think it might be helpful for you to look at one of the Web sites files, well show an icon in the margin like the one t hat is shown here. Other resources are also on the Web site, including Cyberproblems and problems that use the ThomsonONEBusiness School Edition Web site. The textbooks Web site also contains an electronic library which contains Adobe PDF files for extensions to many chapters that cover additional useful material related to the chapter. This electronic library also has several additional complete chapters, as shown in the table of contents. In addition, the ThomsonNOW Web site also has a Learning Path that allows you to assess your level of understanding and to identify specific material that will help you address any areas of weakness. Your instructor may also choose to use the homework/quizzing feature at ThomsonNOW.

Summary
This chapter provided an overview of financial management and the financial environment. It explained the fundamental determinants of a firms value and provided an overview of financial securities, financial institutions, and financial markets, with an emphasis on stock markets. The key concepts covered are listed below: The three main forms of business organization are the proprietorship, the partnership, and the corporation. Although each form of organization offers advantages and disadvantages, corporations conduct much more business than the other forms. The primary objective of management should be to maximize stockholders wealth, and this means maximizing the companys fundamental, or