Mini Case
Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle DellaTorre, a professional tennis player who has just come to the United States from Chile. DellaTorre is a highly ranked tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. DellaTorre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to explain the U.S. financial system to DellaTorre. a. Why is corporate finance important to all managers?

The importance of corporate finance is that it helps managers understand the health of the company and how to act accordingly with a common guideline. The responsibility for controlling company assets falls upon management as a whole.
Managers need to be able to make decisions that will benefit the company and in order to make those decisions they need to have insight into the financial health of the business. If not they could possibly lose funding and find their projects continually short on financial support. Every decision made by management essentially has a financial impact. Managers have a responsibility to increase the shareholders’ stake in the firm.

b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.
Sole Proprietorship: Sole owner of a business. The manager and the owner is the same person. The sole proprietorship has unlimited liability. You pay taxes as owner and for the business ones. The advantage is the ease with which it can be establish and the lack of regulation s