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Financial management & corporate acquisitions - Essay Example
Author : abshiremalcolm
Pages 2 (502 words)
A firm or Corporation is a legal body that is separate and dissimilar from its owners.Corporations must have an owner, but there is not upper limit.The owners are called as share holders or stock holders.The interest of the shareholders in a corporation is divided into units called stock, shares or shares of stock…
A firm or Corporation is a legal body that is separate and dissimilar from its owners. Corporations must have an owner, but there is not upper limit. The owners are called as share holders or stock holders. The interest of the shareholders in a corporation is divided into units called stock, shares or shares of stock. The rules for corporations along with the advantages and disadvantages apply equally to corporations owned by one or more than one shareholder. Corporation like an individual have rights and responsibilities like entering into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes. But the most important feature of a corporation is limited liability. This means share holders have the right to participate in the profits, through dividends and the admiration of stock but are not personally liable for company's debts.Most firms acquire other corporations with the main purpose being to make the most of shareholder value. The other reasons for the acquiring of firms can be entering new markets, increase market share, increase profit, and attain new products. Acquiring firms means an increasing amount of opportunity for the employees and managers. The profitability of the firm is in the hands of the executives, if they handle the company properly than the profitability will increase for the shareholders. Managers are informed one of the main tasks they have is to control cost, they may be overhead cost or cost of capital. This is done to make sure that the firm develop and cut cost for each and every category. ...