Question

PLEASE ANSWER ALL QUESTIONS !

1) What is your understanding of finance in organizations? What exposure or experience do you have with finance?

2) What are the basic financial statements utilized in organizations?

3) All businesses in the United States (U.S.) fall under a particular business structure. What are some common forms of business structures within the U.S.?

Answer 1

Answer(1):

Finance in organization- Finance is very wide and is useful in organizations. Finance is used in day to day operations and taking crucial decisions of business. Finance in organization can be understood by following points-

Working capital finance- Finance is used to boost the working capital of the company. Finance is used in day to day operations of business like paying bills, paying salaries, rent and other expenditures. Working capital financing is done through trade credit, letter of credit, bills, commercial paper, inter corporate deposit etc.

Capital structure finance- Capital structure is a very important and tough decision of the business. Company needs funds for business operations and expansions. Capital structure decision includes whether company should raise the funds from market by issuing shares or company should go for debt financing. Debt financing brings obligation and interest burden with it while in equity financing, company has to give dividend, ownership and voting rights to shareholders. Both sources of finance are important for business and company should maintain an ideal ratio of debt and equity financing.

Capital budgeting finance- This includes investment into a particular project. Different projects with different cash flows and returns are compared with the help of discounted factor and initial cost is compared to the cash inflows and project with higher cash flow and positive net present value (NPV) is approved. Capital budgeting finance also considers the opportunity cost of capital. Capital budgeting finance