3.1.2 issues with different business forms

Question 1

whats the diffreence between a business and a company

Answer 1

A company is a separate legal entity.
The owners of a company are shareholders

Question 2

private companies ltd features

Answer 2

Most popular form of incorporated business
Privately-owned
Shares cannot be traded publicly
Usually just 1 or a few shareholders
Quick & cheap to set up and administer

Question 3

Public limited companies plc

Answer 3

Minimum share capital £50,000
Shares may be traded on a public stock market
Usually many shareholders
More detailed disclosure of information required
Costly to administer

Question 4

hello, im a shareholder in uranus PLC, what do i get as a reward?

Answer 4

Dividens - payment to shareholders (per share) by the companies proffits
Capital Gains (growth) - increase in value of the business, get the chance to sell.

Question 5

whats a share?

Answer 5

An individual part of the issued share capital of a company
Most shares are “ordinary shares”

Question 6

what is share price

Answer 6

determined by supply and demand (more demand = higher price)

Question 7

market capitalisation equation (market cap)

Answer 7

share price (per share) x number of shares in issue = total value of the issued share capital of the company

Question 8

factors that influence the share price (internal)

Answer 8

Financial performance (e.g. profit growth)
Dividend policy
Relationship with key investors (incl. communication)
Management reputation

Question 9

factors that influence the share price (external)

Answer 9

State of the economy
General market sentiment
Whether the company is a takeover target
Alternative investment’s in the company’s sector

Question 10

as a shareholder if you think your share price is gonna fall, you better tell me,right ?

Answer 10

of course, its called a proffit warning. companies must isssue it their shareholders if they expect a fall in share price.

Question 11

Share Capital v Debt

Answer 11

share capital is known as equity finance but debt is most commonly a loan or over draft. they also have to be repaied with intrest but the share capital isnt repaied its just in exchange for ownership and rewards!

Question 12

issuing shares the cash flow side of things

Answer 12

1- issue shares
2- shareholders buy new shares
3-company has more cash and more shareholders

Question 13

when i get a huge ass business how can i issue shares out ?

Answer 13

1- floatation on the stock market, it aims to generate 25-50 million plus but it does take a long time and cost alot of money.
2- Rights issue, new issue of shares to existing shareholders and they have the right to subscribe to new shares (usally at a discount)