page1
Test bank for fundamentals of corporate finance
10th Edition by Ross Westerfield Jordan |all
chapters covered|already graded A+ |questions and
correct verified answers with rationales
, page2
Corporate finance
3. What long-term investments should you take on
2. Where will you get the long-term financing to pay for your investment?
3. How will you manage your everyday financial activities, such as collecting from
customers and paying suppliers?
Financial Management Decisions
capital budgeting, capital structure, working capital management
Capital budgeting
What long-term investments orprojects should the business take on?
Capital structure
How should we pay for our assets?
• Should we use debt or equity
Working capital management
How do we manage the day-to-dayfinances of the firm?
Three different legal forms of business organization exist
1. Sole proprietorship
2. Partnership
3. Corporation
Sole Proprietorship
A business owned by one person
, page3
Someone who is just starting out and deciding if entrepreneurship is the right course
Someone who isn't too concerned about liability and separating themselves from the
business
Sole Proprietorship Advantages
Simplest type of business to start
Least regulated form of organization
Owner keeps all the profits
Sole Proprietorship Disadvantages
Owner has unlimited liability for business debts
All business income is taxed as personal income
Life of sole proprietorship is limited to owner's life span
Amount of equity that can be raised is limited to the amount of the proprietor's personal
wealth
Ownership may be difficult to transfer
A partnership
a business organization owned by two or more persons who agree on a specific division of
responsibilities and profits
Who Should Form a Partnership?
A general partnership is the ideal business ownership type for:
2 people going into business together who want to keept hings simple
Business partners who aren't concerned about liability or keeping themselves separate
from the business
Advantages of a partnership
same as sole Proprietorship
Test bank for fundamentals of corporate finance
10th Edition by Ross Westerfield Jordan |all
chapters covered|already graded A+ |questions and
correct verified answers with rationales
, page2
Corporate finance
3. What long-term investments should you take on
2. Where will you get the long-term financing to pay for your investment?
3. How will you manage your everyday financial activities, such as collecting from
customers and paying suppliers?
Financial Management Decisions
capital budgeting, capital structure, working capital management
Capital budgeting
What long-term investments orprojects should the business take on?
Capital structure
How should we pay for our assets?
• Should we use debt or equity
Working capital management
How do we manage the day-to-dayfinances of the firm?
Three different legal forms of business organization exist
1. Sole proprietorship
2. Partnership
3. Corporation
Sole Proprietorship
A business owned by one person
, page3
Someone who is just starting out and deciding if entrepreneurship is the right course
Someone who isn't too concerned about liability and separating themselves from the
business
Sole Proprietorship Advantages
Simplest type of business to start
Least regulated form of organization
Owner keeps all the profits
Sole Proprietorship Disadvantages
Owner has unlimited liability for business debts
All business income is taxed as personal income
Life of sole proprietorship is limited to owner's life span
Amount of equity that can be raised is limited to the amount of the proprietor's personal
wealth
Ownership may be difficult to transfer
A partnership
a business organization owned by two or more persons who agree on a specific division of
responsibilities and profits
Who Should Form a Partnership?
A general partnership is the ideal business ownership type for:
2 people going into business together who want to keept hings simple
Business partners who aren't concerned about liability or keeping themselves separate
from the business
Advantages of a partnership
same as sole Proprietorship
