Corporation The most common form of business organization, and one which is chartered by

a state and given many legal rights as an entity separate from its owners. This form of

business is characterized by the limited liability of its owners, the issuance of shares of easily

transferable stock, and existence as a going concern. The process of becoming a corporation,

call incorporation, gives the company separate legal standing from its owners and protects

those owners from being personally liable in the event that the company is sued (a condition

known as limited liability). Incorporation also provides companies with a more flexible way to

manage their ownership structure. In addition, there are different tax implications for

corporations, although these can be both advantageous and disadvantageous. In these

respects, corporations differ from sole proprietorships and limited partnerships.(Or,)

A corporation is defined as a legal entity or structure created under the authority of the laws of a state,
consisting of a person or group of persons who become shareholders.

• Managerial finance, the branch of finance that concerns itself with the managerial significance of finance
techniques
• Corporate finance, an area of finance dealing with the corporate financial decisions
• Role of fiancé manager
• Explain why the role of the financial manager today is so important.
• Describe “financial management” in terms of the three major decision areas that
confront the financial manager.
• Identify the goal of the firm and understand why shareholders’ wealth maximization is
preferred over other goals.
• Understand the potential problems arising when management of the corporation and
ownership are separated (i.e., agency problems).
• Demonstrate an understanding of corporate governance.
• Discuss the issues underlying social responsibility of the firm.
• Understand the basic responsibilities of financial managers and the differences
between a “treasurer” and a “controller.”

Unlimited liabilities A type of investment in which a partner or investor can lose an unlimited
amount of money. opposite of limited liability.

Ownership the relation of an owner to the thing possessed; possession with the right to transfer possession
to others

• possession: the act of having and controlling property

• the state or fact of being an owner.
• Ownership is the state or fact of exclusive rights and control over property, which may be an object,
land/real estate, intellectual property (arguably) or some other kind of property. It is embodied in an
ownership right also referred to as title.
• The state of having complete legal control of the status of something
•
• Partner ship
• Definition of partnership
Partnership means a formal agreement between two or more parties that have agreed to work together in the pursuit of
common goals.

Cooperation between citizens, community and institutional resources, and the SPVM goes a long way toward
maintaining public security. The SPVM recognizes the importance of its partnership with the public in finding lasting
solutions to problems, and for this reason it seeks to establish partnerships with local communities.

Definition
A business structure in which an individual and his/her company are considered a single entity
for tax and liability purposes. A sole proprietorship is a company which is not registered with
the state as a limited liability company or corporation. The owner does not pay income tax
separately for the company, but he/she reports business income or losses on his/her individual
income tax return. The owner is inseparable from the sole proprietorship, so he/she is liable
for any business debts. also called proprietorship.
Treasurer The employee at a company who is responsible for the collection, maintenance,
investment, and disbursement of funds.

Controller,

Management process in which the (1) actual performance is compared with planned performance, (2)
difference between the two is measured, (3) causes contributing to the difference are identified, and
(4) corrective action is taken to eliminate or minimize the difference.

Or Device or mechanism installed or instituted to guide or regulate the activities or operation of an

apparatus, machine, person, or system.
NPV
The difference between the present value of cash inflows and the present value of cash outflows. NPV is
used in capital budgeting to analyze the profitability of an investment or project.

NPV analysis is sensitive to the reliability of future cash inflows that an investment or project will yield.

present value The current value of one or more future cash payments, discounted at some
appropriate interest rate.

Shareholder,

One who owns shares of stock in a corporation or mutual fund. For corporations, along with
the ownership comes a right to declared dividends and the right to vote on certain company
matters, including the board of directors. also called stockholder.

Stakeholder,

Person, group, or organization that has direct or indirect stake in an organization because
it can affect or be affected by the organization's actions, objectives, and policies. Key
stakeholders in a business organization include creditors, customers, directors,
employees, government (and its agencies), owners (shareholders), suppliers, unions, and
the community from which the business draws its resources. Although stake-holding is
usually self-legitimizing (those who judge themselves to be stakeholders are de facto so),
all stakeholders are not equal and different stakeholders are entitled to different
considerations. For example, a firm's customers are entitled to fair trading practices but
they are not entitled to the same consideration as the firm's employees. See also corporate
governance.

Discount factor

Alternative term for discount rate.

Discount rate,

Banking: Rate at which a bill of exchange or an accounts receivable is paid (discounted)

before its maturity date.

It plans to be a 75,000 MW company by 2017.