8586210
Description
Flashcards by Ashleigh-Jade Jones, updated more than 1 year ago
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Created by Ashleigh-Jade Jones
about 7 years ago
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| Question | Answer |
| 5 Legal structures: (Business forms) | 1) Sole trader 2) Partnership 3) Private Limited Company 4) Public Limited Company 5) Not For Profit (NFP) Organisation |
| Capital: | amount of money available to a company |
| Unlimited Liability: | owner is responsible for covering debts of a business (risk of personal assets being seized as cover as owner and business exist as one legal entity) |
| Limited Liability: | responsible for debts of the business that won't exceed the amount invested into the company (owner(s) and business exist as a separate legal entity) |
| Sole Trader: (e.g. plumbers, hair dressers, newsagents, photographers) *PROFIT | Key characteristics: - Unlimited liability -Self employed (one owner) -should be short term Benefits: -Small & easy to set up -Full control and easier as only owner -You keep profits -Small amount of start up capital required, reducing costs Drawbacks: -long hours with minimal time off -no split responsibility -development limited by capital available -Difficulty in gaining finance -unlimited liability Change?: -Partnership -> access to more skills/experience and finance -Ltd (Pros) -> more credible, greater access to finance, limited liability (Cons) -> loss of ownership/control, costly, time consuming |
| Partnership: (e.g. Ben & Jerry, Google co-founders, Hewlet-Packard (HP)) *started off as* *PROFIT | Key Characteristics: -2 or more owners -unlimited liability -should be short term Benefits: -more capital available -shared responsibility and skills Drawbacks: -loss of ownership/control -unlimited liability Change?: -Ltd (Pros) -> more credible, greater access to finance, limited liability (Cons) -> loss of ownership/control, costly, time consuming |
| Private Limited Company: (e.g. John Lewis, New Look, Clark's) *PROFIT & SUCCESS | Key Characteristics: -small-medium sized business -owned by a small group of people/family has 'Ltd' after name -limited liability (separate legal entity) -shareholders must be in agreement before selling shares -should be short term Benefits: -greater capital available -greater access to finance -limited liability Drawbacks: -Private shares -limited growth due to 50 shareholder maximum -greater responsibility Change?: -Plc (Pros) -> greater access to finance and public trading of shares for more capital, higher status (Cons) -> loss of control/ownership, dividend payments to shareholders (increase costs) |
| Public Limited Company: (e.g. McDonald's, Starbucks, Blackberry)] *MAINTENANCE OF SHARE PRICE | Key Characteristics: -limited liability -must have £50,000 in capital at least -shares traded publicly via stock exchange has 'Plc' after name -should be long term Benefits: -greater shareholder options -limited liability -can raise large capital Drawbacks: -management problems due to size -Lots of legal formalities -loss of control/ownership (hostel takeover) -dividend payments |
| Dividend: | a sum of money paid by a company to its shareholders out of its profits |
| Not For Profit (NFP) Organisations: (e.g. charities) *SUCCESSFUL WITHOUT TAKING PROFITS | Key Characteristics: -limited liability -established for particular reason/aim -profits reimbursed into company -short/long term depending on success Benefits: -limited liability -no taxes -beneficial to community Drawbacks: -scrutiny from public -no profit -high initial start up costs -paper work -shared control |
| Shareholders: | The owners of shares to a Plc or Ltd company . (own a part of the business) |
| Share Price: | The current market value of a share |
| Changes of Share Price: | * Supply increases (becomes more abundant), price decreases *Demand increases (becomes more desirable), price rises Visa versa |
| Private Sector Organisations: | Companies owned and ran by any private individuals e.g. Tesco, Sainsburys *Main Objective: maximise sales and profits |
| Public Sector Organisations: | companies owned and ran by the governement e.g. NHS *main objective: provide a service to the general public |
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