Final answer:
The question pertains to financial management practices of a Malaysian entrepreneur, including debt, asset, and cash management, and the considerations for optimizing these aspects.
Step-by-step explanation:
The question deals with the financial management of a business owned by an entrepreneur in Malaysia, specifically regarding how the entrepreneur handles finances and what suggestions could be made for optimization in areas such as debt, asset, and cash management.
Shareholders and Company Managers
Shareholders of a company choose the actual company managers typically through voting. In large companies, shareholders vote for the board of directors, who then appoint and oversee the management team responsible for the day-to-day operations.
Financial Intermediaries
Banks are termed as financial intermediaries because they serve as middlemen between savers who deposit money and borrowers who seek funds. Banks take deposits and then lend that money out, thus facilitating the flow of money in the economy.
Raising Funds for Business Expansion
If I owned a small, established firm requiring significant capital for expansion, I'd consider both borrowing and issuing stock. Borrowing would mean taking on debt but maintaining full ownership, whereas issuing stock could raise funds without incurring debt but would dilute my ownership.
Financial Capital and Profits
Financial capital is the money used by businesses to buy what they need to make their products or provide their services. The relationship between financial capital and profits is directly linked; effectively managed capital can lead to higher profits.
Borrowing, Bonds, and Corporate Stock
Businesses may borrow directly from banks or issue bonds to the public. Corporate stock, on the other hand, involves selling ownership stakes in the company.
Types of Business Ownership
Understanding the types of business ownership, such as sole proprietorships, partnerships, and corporations, and the advantages and disadvantages of each, is critical for an entrepreneur.
Conclusion
In conclusion, effective financial management is crucial for the sustainability and growth of a business. An entrepreneur in Malaysia, or anywhere else, must strategically manage their company's finances, bearing in mind the impact of their choices on profits and ownership structure.