Ch4 – AO3

Question 1

Advantages of LTDs (5)

Answer 1

– Limited liability
– More capital raised
– control can be lost to outsiders
– continuity
– More status than sole trader

Question 2

This advantages of LTDs

Answer 2

– Financial information made public
– Costly, and takes time to set up
– Shared profit
– Transfer of shares takes time
– Cannot raise huge amounts of money

Question 3

Advantages of PLCs

Answer 3

– Can raise large amounts of capital
– Limited liability
– Can explode economies of scale
– Able to dominate the market
– Shares easily bought and sold
– High media profile

Question 4

Disadvantages of PLCs (5)

Answer 4

– Expensive to set up
– Outsiders may take control
– Financial information public
– More regulatory control
– Managers take control