Goals and governance of the corporation
3 important questions on Goals and governance of the corporation
What is the task of the treasurer?
his task is to obtain and manage the firm's capital but also maintains relationships with the banks and other investors
Why is it not good to tell the shareholders that the company's main goal is to make profit? (2 examples)
-a company can cut long term investments to get a short term profit, this will not be in the best intrest of the shareholders
-if the company cuts the dividend to invest in other projects with that money the shareholders will not be happy, certainly not if the investment has a low rate of return?
-if the company cuts the dividend to invest in other projects with that money the shareholders will not be happy, certainly not if the investment has a low rate of return?
When does a corporation know that they can do an investment with the shareholders money?
the CFO has to compare the return of return from their investment with the return of investment that the shareholders would get if they were to invest on their own, the CFO has to make sure he exceeds the opportunity cost of capital.
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