FIN 370 Week 1 DQ 4 -
Finance is the study of how people and businesses evaluate investments and raise capital to fund these investments. Key principles guide the process of evaluating investment decisions. This chapter lays the foundation for understanding the principles that underpin financial decision making. Financial decisions permeate every aspect of the business world and of our personal lives. Understanding basic financial concepts is critical to making informed decisions concerning the use of financial resources.
This chapter describes the three types of business organizations--sole proprietorships, partnerships, and corporations--and compares and contrasts the similarities and differences among these types of business organization. Further, the role of finance is discussed relative to the overall structure of the organization. The overriding goal of finance is to maximize shareholder wealth. Ethical errors in judgment tend to destroy trust in management thereby preventing management from working toward that goal.
What are the 5 basic principles that finance encompasses?