Professional Documents
Culture Documents
(Chapter 1) W1 Keown - Fin - Introduction
(Chapter 1) W1 Keown - Fin - Introduction
Financial Management
– The Ties that Bind
Chapter 1
Learning Objectives
1. Identify the goal of the firm.
2. Compare the various legal forms of business organization and
explain why the corporate form of business is the most logical
choice for a firm that is large or growing.
3. Describe the corporate tax features that affect business
decisions.
4. Describe the corporate tax features that affect decisions.
5. Explain the 10 principles that form the foundations of financial
management.
6. Explain what has led to the era of the multinational corporation.
Sole Proprietorship
Partnership
Corporation
Drawbacks:
No secrecy of information
Maybe delays in decision making
Greater regulation
Double taxation
Sales $50,000
Cost of Goods Sold 23,000
Gross Profit $27,000
Operating Expenses
Administrative Expenses $4,000
Depreciation Expense 1,500
Marketing Expenses 4,500
Total Operating Expenses $10,000
Operating Income $17,000
Other Income 0
Interest Expense 1,000
Taxable Income $16,000
Additional surtax:
5% on income between $100,000 and $335,000
Depreciation Expense
A corporation may expense an asset’s cost over its useful life