Topic 1 Continued Flashcards
What are some pros of a private limited company
Pay corporate tax which is less than income tax
Easier to get loans from banks as they can view your business
Owners have control as investors are invite only
Don’t have to public all financial info compared to a PLC
What are cons of a private limited company
Less opportunities for capital as shareholders are invite only
Registering the business is time consuming which gives competitive disadvantage
There can be conflict of ownership
Selling shares can be difficult
Have to pay dividends from profits
What is an AGM
Annual general meeting
PLCs require the directors to hold an AGM to inform shareholders on objectives and strategy for business
What are some not for profit organisations
Social enterprise
Charities
What is a social enterprise
Same as a corporate business but puts all profits in cause + growth
What are charities
Organisation that only uses donations to a cause
What Is social entrepreneurship
Targets a social issue with a solution
What are advantages of a public limited company
Likelier to take loans as banks can see
More likely to gain share capital
Can retain how many shares go into the market
Enables quicker growth
What are disadvantages of a public limited company
Can’t control who buys shares
People can see all data and accounts as it’s public
What is IPO
Initial public offering
Issuing shares to public
What impacts share price
Voting rights
Large investors don’t wanna invest in unethical operations
Timings of when they list on the market
Retail investors
Why do investors buy shares
Return on investment(Dividends)
Make a benefit when reselling shares
Pay capital gain tax
When business do well share value shared increases
What are internal factors affecting share price
Decisions made by leader of business
Leaders attitude to risk
Financial performance,profit returns=dividends
What is market capitalisation
Value of the business determined by the price of its shares
Formula for market capitalisation
Share price x number of shares issued
What are some sources of finance
Overdraft
Crowdfunding
Bank loan
Owners capital
What is a overdraft
Short term emergency funds that make your balance go below £0
What is owners capital
Owners own savings that they might want to contribute
What is crowdfunding
Take contributions from people online
Long term source of finance
What is a bank loan
Bank decide rate of interest long term
What s divorce of ownership
Happens when shareholders do not control day to day decisions made in the business
Describe divorce of ownership
Majority of shareholders in PLCs don’t influence decisions at all
Delegation of responsibility to management ownership shares and decision shares
Make sure directors are working for best of the business and not for personal financial gain
What is labour supply
How many people are available to work and skill sets of these people
What is external environment
Business being able to be dynamic which means adapts and change to customer needs
What are some political factor
Charge of taxation
Gross domestic profit-financial good produced in country each year
Lower taxes means more disposable income
What is interest
The cost of borrowing and the reward of saving
What is inflation
Increase in price of goods over time
If inflation is less that means people can spend less and save money
Inflation is a problem if people can’t afford it
What are some seasonal demands
Fuel
Summer seasons
Religious festivals
Farming in seasons
What does PESTLE stand for
Political
Economic
Social
Technological
Legal
Environmental
Name the 4 stages of the economy
Boom
Downturn
Recession
Recovery
Describe boom
High employment,demand,investment,confidence
Describe downturn
Decreasing employment,demand,investment,confidence
Describe the recession/slump(edic)
Low employment,demand,investment,confidence
Describe recovery
Increasing employment,demand,investment,confidence
Depending on where a business is on the economic cycle it will impact
Interest rates
Consumer income
Unemployment
Exchange rates
What is corporation tax
Tax on profits
What are factors that affect share value
Risks taken
New leadership
Actions of competitors
What is liquidation
Act of turning assets into cash
What is receivables
Money coming into the business
What is payables
Money you owe
What are financial objectives
To do with financial performance of business
What are corporate objectives
This is to do with a business as a whole
What is insolvency
Inability to pay debt
