Lester Electronics

Scenario Financing Solution: Lester Electronics Inc.

Publicly traded corporations are continually faced with important decisions which will affect the financial health of the firm and because these firms depend on financial investments from shareholders; all decisions should revolve around maximizing the shareholders wealth. The wealth of shareholders can be maximized through many financial tools which include: the analysis of financial statements, capital structures, accounting, and financial stability. Financial statements, capital structures, and company accounting can also be used to gain insight on a company's future performance. These tools aid in maximizing the shareholders wealth because they provide investors with an oversight of the firm's progress which can aid in investment decisions. These tools also provide financial managers with the metrics needed in order to track and measure goal progression.

Financial Managers oversee the preparation of financial reports and investment activities. They are responsible for choosing the capital structure that maximizing the firm's value. "Financial Managers hold an important and elevated role in corporate governance" (Tanzanian Royalty, 2006). Managers must ensure that the firm's stockholders and interests are protected, balanced, and preserved.

Organizations are structured according to their decision to rely on debt. However, the immediate concern is the maximization of shareholder wealth. Ross, Westerfield, & Jaffe, 2005 stated; If the goal of the management of the firm is to make the firm as valuable as possible, then the firm should pick the debt-equity ratio that makes the firms total value as big as possible.