Equity in limited companies Flashcards
(21 cards)
What is one disadvantage to offering shares to public
Lots of scrutiy on their managment of business
e.g What are they doing to improve
When do Plc need to submit their accounts within of year ending
6 months
When do LTDs need to submit their accounts within of year ending
9 months
What is the minium of share capital needed for PLCs
50,000
How many directors do PLCs need at least?
2
Advantages of being Plcs
easier to get capital
easier to make acquisitions
more of a prestigious profile
Market capitalisations
What is the equity in LImited companies
- Ordinary share capital
- share premium
- retained earnings
- general capital reserves
What is ordinary share capital?
Capital invested in a company by owners
comes with voting rights over business
What is share premium accounts
When companies can sell shares for higher price than nominal (face value) - profits are in this account
What are retained earnings?
Amout of a business’s net income that is kept within accounts, rather than paid to share holders
Can be used for dividend payments
How to calculate retained earnings?
Balence at beginning of year+ profit of year - dividen payment to shareholders
What is general capital reserves?
They can put retained earnings into this account meaning these reserves cant be used to pay dividends - used for further investment of growth
What equity can be withdrawn?
Only revenue reserved
What are the sources of long term finance?
Share issue (bonus and rights)
Retained earnings
Long term borrowings
How can a company issue more shares to exisiting shareholders?
- Bonus issue
- Rights issue
What is the bonus issue of more shares?
Given an extra share for free
e.g 1 in 4 bonus issue (FREE)
What is the rights issue of more shares?
Give existing shareholders the right to buy more shares at lower price than market value
What are the two types of narrative reporting?
- Directors report
- Strategic report
What is the directors report of narrative reporting
- Name of directors
- Dividens
- Employees
- Important events in compnay
- Likely future of business
- Research and development activities
What is narrative reporting
Backward looking, taking accounability
information included at the front end of an annual report and accounts
ESG Environmental, Social, and Governance)
What is strategic reporting in narrative report
- Future developments
- Strategic management (how entity wants to generate and preserve value)
- Business environment - internal and external (trends, risks, employees, human rights)
- Business performance - developemt in year (anaylsis, key performance indicators, gender diversity)