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FIN515: Week-1 Assignment
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MINI-CASE (p. 45): Consulting Michelle DellaTorre

To explain the U.S. Financial System to Ms. DellaTorre, I would provide her with the following answers to the questions given to me by my boss:

1. Why is corporate finance important to all managers?

Corporate finance is a basic component of how a business is run. All managers should keep this in mind to direct funds to the optimal division or product in a company. In addition, managers should understand how their company is financed and whether it has a risk of bankruptcy. Conversely, managers should understand if the equity in the business is undervalued and has the potential to grow.
2. 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: A type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. This means that the owner has no less liability than if they were acting as an individual instead of as a business. Some advantages are the ability to raise capital either publicly or privately to limit the personal liability of the officers and managers, and to limit risk to investors. Also, sole proprietorships have the least amount of government rules and regulations affecting them. Some disadvantages are that the raising of capital for a proprietorship is more difficult because an unrelated investor has less