Chapter 5 Flashcards
Analytics
Computing tools and techniques used to analyze big data, major types include data mining, text mining and predictive analytics
Unlimited liability
A legal condition under which any damages or debts incurred by a business are the owner’s personal responibility
Sole proprietorship
A business owned by a single person
Partnership
An unincorporated company owned by two or more people
General partnership
A partnership in which all partners have joint authority to make decisions for the firm and joint liability for the firm’s financial obligations
Limited partnership
A partnership in which one or more persons act as general partners who run the business and have the same unlimited liability as sole prorietors
Limited liability
A legal condition in which the maximum amount each owner is liable for is equal to whatever amount each invested in the business
Corporation
A legal entity, distinct from any individual persons, that has the power to own property and conduct business
Shareholders
Investors who purchase shares of stock in a corporation
Public corporation
A corporation in which stock is sold to anyone who has the means to buy it
Liquidity
A measure of how easily and quickly an asset such as corporate stock can be converted into cash by selling it
S corporation
A type of corporation that combines the capital-raising options and limited liability of a corporate with the federal taxation advantages of a partnership
Limited liability company (LLC)
A structure that combines limited liability with the pass-through taxation benefits of a partnership; the number of shareholders is not restricted, nor is members’ participation in management
Benefit corporation
A profit-seeking corporation whose charter specifies a social or environmental goal that the company must pursue in addition to profit
Board of directors
A group of professionals elected by shareholders as their representatives with responsibility for the overall direction of the company and the selection of top executives
Corporate governance
In a broad sense, all the policies, producers, relationships and systems in place to oversee the successful and legal operation of the enterprise; in a narrow sense, the responsibilities and performance of the board of directors specifically
Proxy
A document that authorizes another person to vote on behalf of a shareholder in a corporation
Shareholder activism
Activities undertaken by shareholders (individually or in a group) to influence executive decision-making in areas ranging from strategic planning to social responsibility
Corporate officers
The top executives who run a corporation
Chief executive officer (CEO)
The highest-ranking officer of a corporation
Merger
An action taken by two companies to combine in a single entity
Acquisition
An action taken by one company to buy a controlling interest in the voting stock of another company
Hostile takeover
Acquisition of another company against wishes of management
Leveraged buyout (LBO)
Acquisition of a company’s publicly traded stock, using funds that are primarily borrowed, usually with the intent of using to pay back the loans used to acquire the company
Strategic alliance
A long-term partnership between companies to jointly develop, produce or sell products
Joint venture
A separate legal entity established by two or more companies to pursue shared business objectives
Big data
The massive data sets that companies collect and analyze to find important trends and insights
What are the key advantages of a partnership?
Simplicity, single layer of taxation, more resources, cost sharing, broader skill and experience base, and longevity
What are the potential disadvantages of a partnership?
Unlimited liability for general partners, potential conflict, and expansion, succession and termination issues
Private corporation
A corporation in which stock is owned by only a few individuals or companies and is not made available for purchase by the public
What are the advantages of a corporation?
Ability to raise capital by selling shares of ownership, liquidity, longevity, and limited liability
Disadvantages of a corporation?
Start-up costs and complexity, ongoing reporting requirements, extra demands on top managers, potential loss of control, double taxation, and the shot-term orientation of the stock market
Three groups that are responsible for the governance
The shareholders who elect, the board of directos, and the corporate officers
