Finance and the Financial Manager<br >INTRODUCTION<br >This chapter provides a brief description of finance and the key role played by a financial<br >manager in the operation of a business. Further， like the customary introductory chapter<br > in most textbooks， the chapter also gives an overview of the book. The chapter is<br > organized in six sections and covers the following topics succinctly.<br > Organizational forms for business and the advantages and disadvantages of<br > the corporate form<br > . The role and the organizational position of the financial manager<br > Separation of ownership and management<br > Financial markets and financial institutions<br > _ Overview of the book<br > KEY CONCEPTS IN THE CHAPTER<br > Corporate and Other Forms of Business Organization: Common organizational forms<br > for businesses include the sole proprietorship - the typical form for a small business<br > owned and managed by a single individual; the partnerships， and corporations. As the<br > business grows and becomes larger， they tend to be organized as corporations with a<br > large number of stockholders. Most businesses evolve from smaller privately held<br > corporations to large public corporations. The corporate form enjoys the advantages of<br > limited liability for the owners (stockholders) and the ability to attract large amounts of<br > capital. Professional managers are hired to manage today s typical corporations. This<br > separation of ownership and management gives the firm permanence. Corporations have<br > distinct legal identity and are governed by the articles of incorporation. Corporations<br > enjoy considerable flexibility of operation.<br > The disadvantages of the corporate form include costly legal and accounting set-up and<br > double taxation of earnings.<br > Financial Manager s Role: Corporations use different real assets to run their business<br > and finance the acquisition of these assets partly by raising finances through issue of<br > financial securities， which are in the financial markets (figure 1.1). The financial<br > manager s primary role is deciding which assets to invest in and how to finance them<br > Thus the two types of decisions the financial manager is called upon to make are<br > investing decisions (capital budgeting) and financing decisions. Corporate finance is<br > primarily concerned with these decisions.<br >