CHAPTER 1
The Goals and
Functions of
Financial Management
The Role of the
Financial Market
Capital Markets: those
markets where securities
have a life of more than
one year.
Money Markets refer to
those markets dealing
with short term securities
that have a life of one year
or less.
Exist as a vast global network
of individuals and financial
institutions that may be lenders,
borrowers, or owners of public
companies worldwide.
Participants of Financial
Market also include
National, State and Local
Governments. Primarily
borrowers of funds for
highways, education, welfare,
etc.
The meeting places for people,
corporations, and institutions that
either need or have money
to lend or invest.
Forms of Organization
Corporation: Owned by shareholders
with limited liability (their liability
exposure is generally no greater
that their initial investment)
because the corporation reports and pays
taxes on ist own income.
Partnership: Second
form of organization.
Two or more owners.
Sole Proprietorship:
Single person ownership.
The Field of Finance
The Financial Manager must
know how to interpret these
statements in order to generate
the best return possible in
the long run.
Accounting Provides Financial Data through
Statements or Cash Flows
Balance Sheets
Income Statements
