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Financial Management Overview

1) What are the primary responsibilities of a corporate financial staff?

2) Is stock price maximization good or bad for society?

3) Is maximizing stock price the same thing as maximizing profit?

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1) What are the primary responsibilities of a corporate financial staff?
- The primary responsibilities (goals) of a corporate financial staff are to enhance corporate value, without taking excessive financial risks.

The corporate financial staff makes long-term and short-term decisions to achieve the goals. Capital investment decisions comprise the long-term choices about:
- Which projects receive investment,
- Whether to finance that investment with equity or debt, and
- When or whether to pay dividends to shareholders.

Short-term corporate finance decisions are called working capital management and deal with the balance of current assets and current liabilities; the focus here is on:
- Managing cash,
- Inventories, and
- Short-term borrowing and lending (e.g., the credit terms extended to customers).

2) Is stock price maximization good or bad for society?
In general, it is ...

Solution Summary

The primary responsibilities of a corporate financial staff are described. Stock price maximization is explained. Difference between maximizing stock price and maximizing profit is explored.

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