Discussion Questions

WEEK 1 DISCUSSION FINANCE BUS650

Explain the various aspects of finance that management must understand.

The first aspect of finance that managers must understand is the financial balance sheet. In order to understand the balance sheet, managers must understand how the company invests their money and how they generate revenue and the requirements to repay the investors such as dividends, coupon payments. Managers must also understand how to use the investor’s money to create profit. Finally, they must understand ethics and legal requirements to investing.

Describe why a manager needs to understand the characteristics and importance of financial markets including their liquidity, competitiveness, and efficiency.

Managers have to understand liquidity, to understand the value of the company and the ability to pay back investors. Competitiveness as it pertains to financial markets, is the relationship of investors to the companies seeking investment funds. Getting money from investors is just as difficult as getting customers to buy your product. Investors want a good return on their money and look for those options just as the consumer looks for the best product for their money. Efficiency pertains to information about the stocks and the type of data, such as historical, public, and private information. Mangers have to understand the financial market to understand how to get additional capital and how to invest on behalf for the company.

My uncle is an investor. He made a great product for the medical industry and had a lot of interest in investing in his machine. He started to sell stock to investors and investing firms and made a good profit. The issue, was that there was no faith in his ability to run a company, which is what he wanted. He was approached to sell the copyright for a sizable profit, but he decided against it. The investor started pulling out their money, the business team stopped assisting and marketing his product. The initial release of...