forms of ownership Flashcards
what is ordinary share capital
money raised through sale of shares
what is a dividend
proportion of profits given to shareholders
what is market capitalisation
total value of company’s shares
what is a private equity firm
investment company that provides funding to start up or operations companies
what are the two non-profit organisations
- charity
- mutuals
what is a mutual company
- owned and run by members
- profits reinvested back
role of shareholders
- voting rights (more shares = more power)
- dividend decision (directors decide how profits are split)
- board or directors role (highest level of management, shareholders can vote)
examples of divorce of ownership and control
- owners (may not be involved in day to day runnings)
- managers (owners may prioritise short-term profits while manages focus on long-ter,
example of way to aline interests
through incentive schemes
what is the influence on share price if there is goof economic conditions
- investors feel confident + demand for shares rise
–> share price goes up
why would you invest in a. company
- potential profit
- gain control
- voting rights
company performance that caused share price to increase
- profit margins
- revenue growth
- market share
- new product launches
- expansion into new markets
what is the influence on share price if there is difficult economic conditions
- no confidence in shares + demand falls
–> share price falls
what is the influence on share price on long term performance
- over long term markets tend to reward strong companies
–> share price increase
ways to measure economic environment
- interest rate
- inflation
- exchange rates
- economic growth
- government policy
