a. True b. False (1-3) Forms of organization 4. F M Answer: b EASY An advantage of the corporate form of organization is that corporations are generally less highly regulated than proprietorships and partnerships. a.
In a limited partnership, the limited partners are liable only for the amount of their investment in the partnership; however, the limited partners typically have no control 3- Corporations. It has three major advantages: 1. Unlimited life, 2. Easy transferability of
Proprietorship has three important advantages: it is easily and inexpensively formed; its subject to few government regulations and; its income is not subject to corporate taxation but is taxed as a part of the proprietor’s income. Limitations include: difficulty obtaining capital needed for growth; having an unlimited personal liability for business debts can result in losses that exceed the money invested in the company and; life of a proprietorship is limited to life of its founder. For these reasons sole proprietorship is used mainly for small businesses. A partnership exists when there are two or more persons or entities associate to conduct non-corporate business for profit. Partnership agreements define the ways that any profits and losses are shared between partners.
Private companies have a relatively small number of shareholders and do not offer or trade shares to the general public. The Purpose of a Limited partnership organisation is to make profit, Limited partnerships are usually owned by two or more people, which they finance and run join tly for personal gain, in this type of organisation. Profits are shared equally. A Public Limited company (PLC) this organisation is similar to a structure of a private company, however their purpose involves a more long-term strategy for profit making. Shareholders own PLC’s, and unlike private limited companies these are advertised to the public.
As the retailers incur virtually no costs by changing suppliers it is easy for them to play them against each other to get better terms. This negative effect is heightened by high supplier volume. As discount retailers account for a large percentage of their revenue, suppliers don’t have strong negotiating power. Power of Buyers – Low-Medium Purchases are not a large part of total income which
For this, you must have expertise in finance. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. | Advantage | Disadvantage | Sole proprietorship: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Partnership: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Corporation | -unlimited life-easy transferability of ownership interest-limited liability | -corporate earnings may be subject to double taxation- more complex and time- consuming than creating a proprietorship or a partnership | c. How do corporations go public and continue to grow?
Ratio | Formula | Amaon 2013 | eBay 2013 | Debt Ratio | TL/TA | | | In leverage ratio, I choose debt ratio, eBay is 24.6% while Amazon is 54.8%. In this ratio, eBay is lower than Amazon which means eBay has less debt should to pay than Amazon. EBay’s assets are financed more through equity than debt compare to Amazon, illustrated that eBay has a lower risk in operation. In addition, eBay may have more borrowing capacity and financial flexible to enlarge its business than Amazon. Let’s see some profitability ratio to have some in-depth discussion.
To equity (levered free cash flow): Same as firm FCF and then less interest and any required debt amortization. 2. What are the four basic ways to value a company? Market comparisons/trading comps/comparable companies: Metrics, such as multiples of revenue, earnings and EBITDA like P/E and EV/EBITDA can be compared among companies operating in the same sector with similar business risks. Usually a discount of 10 percent to 40 percent is applied to private companies due to the lack of liquidity of their shares.
The strategy involved receiving orders directly from customers and avoiding distribution channels. It was an efficient and less expensive way of distribution and production. That enabled Dell to attain cost leadership and competitive advantage in PC market. 2. Sources of Dell’s competitive advantage In general, Dell’s competitive advantage came from 4 sources: - Just in time purchasing of components (avoiding falling prices) - Customers linked directly to manufacturer - Lower inventory costs (avoiding carrying and inventory costs based on cost of capital) - Distribution channel related costs and markups (which increases prices to the customer) Each one of these measures enabled costs cuts, quicker deliver time and a more reliable finished product.
1-11 (b) Net income $1,005.1. 1-12 (a) Net increase in cash $19,000. 1-13 (a) Net decrease in cash $(762). 1-14 Total assets $82,000. 1-15 (b) Total assets $7,891.6; total liabilities $3,109.9.