Question

Please respond to the following:

• Describe the costs and benefits of each of the major forms of business?

• Describe the goals of a financial manager.

Answer 1

Describe the costs and benefits of each of the major forms of business?

Answer- There are three main major forms of business sole proprietorship, partnership firms and corporation and there cost and benefit of each of the business are :

• Soleproprietorship - owned by one individual but that owner have unlimited liabilities.
• All business decision is taken by owner.
• Owner receives the profits that the business earns, and bears the financial responsibility for losses.
• Business simple to set ups.
• Limited capital
• Partnership firms- Like a proprietorship but with more than one owner.
• Together makes all business decision.
• They share profit and losses of business in pre defined ratio.
• Partnership firms are large capital based but limited capital with unlimited liabilities.
• Corporation - owned by a large number of shareholders.
• Limited liabilities.
• Large capital based
• Separate legal status but dubled taxation.
• Separation of ownership from professional management.

Describe the goals of a financial manager?

The main goals of a financial manager are :

• With the help of financial manager we can maximizes wealth and maximisation of profit pool.
• minimizing risk
• Financial manager takes financial decision in proper way to ensure high level of profits.
• Strike judicious balance between return and risk .
• Sufficient flexibility in the financial operations of the enterprise .
• Imparting sufficient liquidity and profitability of the enterprise.
• Maintaining proper cash flow
• Proper utilization of finance.