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BBA-II
Chapter 1
An Overview of Financial
Management
Learning Objectives
• The purpose of this chapter is to give you an idea
of what financial management is all about.
• Key aspects of this course would include:
– Forces that will affect financial management in future.
– The place of finance in a firm’s organization.
– The relationships between financial managers and their
counterparts .
– The goals of a firm.
– The way financial managers can contribute to the
attainment of these goals.
What is Financial Management?
Modern Corporation
Shareholders Management
President
Treasurer Controller
• Sole proprietorship
• Partnership
• Corporation
Sole proprietorships & Partnerships
• Advantages
– Ease of formation
– Subject to few regulations
– No corporate income taxes
• Disadvantages
– Difficult to raise capital
– Unlimited liability
– Limited life
Corporations
• Advantages
– Unlimited life
– Easy transfer of ownership
– Limited liability
– Ease of raising capital
• Disadvantages
– Double taxation
– Cost of set-up and report filing
Managerial Actions to Maximize
Shareholder Wealth