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PRESENTATION
 WHAT IS FINANCE

• Finance can be defined as the science and art of managing money.

 CAREER OPPORTUNITIES IN FINANCE

There are two types of careers ----- Financial services and Managerial finance
• Financial services deals with the management of money for individuals, businesses and
governments and includes the design, advice and financial products. It includes a variety
of interesting Career opportunities such as: Banking, personal financial planning
,Investments, Real estate, Insurance.
• Managerial finance is concerned with the duties of the financial manager working in a
business.
LEGAL FORMS OF BUSINESS ORGANIZATION
 Partnership
A partnership is a business owned by two or more people and operated for profit.
Some strengths are- Can raise more funds than sole proprietorships, More available brain power
and managerial skill, Income included and taxed on partner’s personal tax return.
Some weaknesses are- Owner have unlimited liability, Partnership is dissolved when a partner
dies, Difficult to transfer partnership.
 CORPORATIONS

• A corporation is an entity created by law and must be registered with the state and must pay taxes.
Corporations are legally recognized with structures, meaning they exist as individual entities apart
form the people who own them or work for them.
Some strengths are- Owners have limited liability, Ownership is readily transferable, Long life of
firm,
Some weakness are- Taxes are generally higher because corporation income is taxed, More expensive
to organize than other business forms.
 GOAL OF THE FIRM

Maximize shareholder wealth

 Managers primary goal should be to maximize shareholders wealth.
1. The simplest and best measure is the share price.
2. Managers should take actions that increase share price. Maximizing share price is not
equivalent to maximizing profits.
 Maximizing share price is not equivalent to maximizing profits.

1. Common measurement is earnings per share (EPS)

2. EPS is calculated by dividing the periods total earnings available for the common
shareholders by the number of shares of common shares.
 MAXIMIZE PROFIT

Three reasons why profit maximization does not always lead to the highest possible share
price.
• Timing- The sooner funds are received the sooner they can be reinvested to provide
greater future earnings.
• Cash flows- A profit does not mean necessarily mean cash inflows exceeded cash
outflows. Certain accounting assumptions can allows a company to show a positive profit
• Risk- Profit maximization does not account for risk. The chance that the outcome may
differ form those expected. Return and risk are the key determinants of share price.
 THE ROLE OF BUSINESS ETHICS

 Business ethics are the standards of conduct or moral judgements that apply to persons engaged in commerce.
 Violations include:
1. Creative accounting
2. Earnings management
3. Misleading financial forecast
4. Insider trading
5. Fraud
6. Excessive executive compensation.