It is easily and inexpensively formed, 2. it is subject to fewer government regulations. 3. its income is not subject to corporate taxation. Disadvantages- 1. Capital for growth may be difficult to obtain. 2. unlimited personal liability for the business debts.
Solo Trader: Solo trader is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. These types of businesses are mostly small and local. Advantages: Quick decision making: A sole trader enjoys the freedom in making business decisions. The decision making is quick because there is no need to agree with anyone. This may lead to timely capitalisation of market opportunities as and when they rise.
(Points : 5) is increased with a debit is decreased with a credit is not an expense account All of the above 1. (TCO A) An advantage of the corporate form of business is that _____. (Points : 5) it has limited life its owner's personal resources are at stake its ownership is easily transferable via the sale of shares of stock it is simple to establish 2. (TCO A) The Dividends account _____. (Points : 5) is increased with a debit is decreased with a credit is not an expense account All of the above 3.
Answer: C Shareholders are owners. 3. Limited liability is an important feature of: A) Sole proprietorships B) Partnerships C) Corporations D) All of the above Answer: C 4. A firm's investment decision is also called the: A) Financing decision B) Capital budgeting decision C) Liquidity decision D) None of the above Answer: B 5. The goal of a financial manager is to: A) Maximize sales B) Maximize profits C) Maximize the value of the shareholders D) Maximize the value of the firm with both bond and stock holders Answer: C ( Many of you chose D) This is because shareholders are the owners and managers are hired by them.
Since non-profit business are not owned by their board of directors, people in charge of the organization work to improve the general performance of the hospital and serve the community they belong to. St. Francis is a system of hospitals that is privately owned for profit business. For profit hospitals when compared to non-profit and government owned, have a much simpler way of measuring their success, and evaluating their financial situation. Their main financial objective is to earn profit. For-profit organizations are funded by investors who are usually the main executives of the company, therefore their focus stays true to the name “for-profit”, and there isn’t much gray area as to what is the financial mission of those types of hospitals.
A side benefit to that is there is no loan payment to budget for. A second advantage to equity financing is the company does not have to offer up collateral as they would have in the original plan to finance the $50 million. Therefore, the company is not at risk of losing collateral, or possibly the entire business to the financier. Additionally, any possible losses incurred will be shared with the equity holders. The final advantage enjoyed by AMSC is that they can keep the financial flexibility described in Aswath Damodaran’s presentation: The Debt-Equity Trade Off: The Capital Structure Decision.
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. Sole proprietorship is a business owned by one individual. Advantage: Understand that sole proprietors don't have to answer to a board, partner or group of investors.
Chapter 5 Summary (See related pages) 1. The major forms of business ownership are sole proprietorships, partnerships, and corporations. • What are the advantages and disadvantages of sole proprietorships? The advantages of sole proprietorships include ease of starting and ending, being your own boss, pride of ownership, retention of profit, and no special taxes. The disadvantages include unlimited liability, limited financial resources, difficulty in management, overwhelming time commitment, few fringe benefits, limited growth, and limited life span.
At least in the health care battle, the administration can count some powerful corporate interests on its side — like the large segment of the Fortune 500 that has concluded the current system is unsustainable. That is hardly the case when it comes to challenging agribusiness. Cheap food is going to be popular as long as the social and environmental costs of that food are charged to the future. There’s lots of money to be made selling fast food and then treating the diseases that fast food causes. One of the leading products of the American food industry has become patients for the American health care industry.
There are also hybrid forms which are limited partnership, the limited liability partnership, the professional corporation, and the s corporation. The advantages of a proprietorship are: it is easily and inexpensively formed, it is subject to few government regulations, and the business pays no corporate income taxes. The disadvantages are: it is difficult for it to obtain large sums of capital, the proprietor has unlimited personal liability for the business debts, and the life of the business organized is limited to the life of the individual who created it. The major advantage of a partnership is its low cost and ease of formation. The disadvantages are: unlimited liability, limited life of the organization, difficulty of transferring ownership, and difficulty of raising large amounts of capital.