When discussing finanical managment for corporations, it is important to define the type of corporate formation and sector the company is in. Such a definition is important because it leads to an objective basis for making and evaluating financial decisions. As an enrolled agent, it is your duty to work directly with the company to look for ways to increase net assets, while minimizing debts and other taxes the business incures.
These are only a few of the goals we could list. Furthermore, each of these possibilities presents problems as a goal for the financial manager. For example, it’s easy to increase market share or unit sales: All we have to do is lower our prices or relax our credit terms. Similarly, we can always cut costs simply by doing away with things such as research and development. We can avoid bankruptcy by never borrowing any money or never taking any risks, and so on. It’s not clear that any of these actions are in the stockholders’ best interests. Profit maximization would probably be the most commonly cited goal, but even this is not a precise objective. Do we mean profits this year? If so, then we should note that actions such as deferring maintenance, letting inventories run down, and taking other short-run cost-cutting measures will tend to increase profits now, but these activities aren’t necessarily desirable. Thus, one thing you will have learned from the fast forward academy course, is how to help companies increase their assets, by decreasing their taxable income. Thus, all things being the same, a company does not have to increase capacity or take additional risk, to generate more income. Keep in mind when formulating plans for individuals or corporations, that you will have to periodically make changes to the financial plan. Additionally, at least yearly you should be going over the companies financial plans and charting what progress has been made to achieve various objectives and goals.