Different Forms of Business Flashcards
What are public sector organisations?
Owned by the government and run by them
What do public sector organisations aim to provide?
Services to the public than rather make a profit
What is an example of public sector organisations?
NHS
What are private sector organisations?
Owned by and run by private individuals
What is an example of a private sector organisation that aim to make a profit?
Charities
What are social enterprises?
Normal businesses with a social objective.
What are a social enterprise’s profits used to pay for?
Its social activities
What are mutual organisations?
Like building societies aim to offer the best value on products and services
What are a mutual organisation profits used to pay for?
Profits are reinvested into the business in order to reduce prices
What does unlimited liability mean?
That any business debts become the personal debts of the owner
What is an example of a business with unlimited liability?
Sole traders
Why can unlimited liability be bad?
Huge risk
What is limited liability?
That the owners aren’t personally responsible for any debts of the business
Do shareholders have limited or unlimited liabilty?
Limited liability
What are 2 examples of businesses that have limited liability?
Private and public limited companies
What is a sole trader??
An individual trading in his or her own name
What is the main feature why people become sole traders?
They have full responsibility of finances and meeting costs and requirements
What does Capital Requirement mean?
Money invested to set up a business or fund growth
What are 2 advantages of being a sole trader?
Freedom
Profit
What are 2 disadvantages of being a sole trader?
Risk
Unlimited liability
How are public sector organisations funded??
By UK tax system
What is A LTD?
Private limited company
What is a PLC?
Public limited company
What liability do PLCs and LTDs have?
Limited
Who own PLCs and LTDs?
Shareholders
How is the capital value shared out?
Shares
Who can sell shares to the public?
PLCs
Who has their shares not on stock exchange?
LTDs
How do shareholders share their shares in a LTD?
With agreement of the other shareholders
What do PLCs need in share capital?
Over 50k
What is ordinary share capital?
Money raised by selling shares
Is OSC used for short or long term investment?
Long-term investment
What are shareholders paid in return of their investment?
Dividends
What are dividends?
A proportion of the profits earned by the company earned by the company which are split and paid out to the shareholders.
What is market capitalisation?
The total value of all the ordinary shares issued by a company
How do you calculate market capitalisation?
Number of issued shares x current share price
