ABSTRACT
This chapter deals with a variety of financial management issues, including expected performance, capital structure, risk management, and the avoidance of corporate failure. The capital provided may take the form of equity, overdrafts, credit, loans, or funds made available from the public purse. The providers of this finance are key stakeholders in the organization. Earnings per share (EPS) are maximized when the enterprise achieves the greatest possible sustainable return over time on the capital employed in the business. Dividends may be reduced if profits are low. They may also be reduced if there is a pressing need to retain funds in the business for investment in new business development, acquisition or innovation. These retained earnings are a widely used source of working capital and investment finance. The servicing of loan finance commitments represents a fixed cost to the business. Interest payments on loan finance, and capital repayments themselves, cannot normally be waived.
