Understanding Different Business Forms - Unit 1 Flashcards
Identify the difference between private and public sector businesses
The profit from private sector organisations benefits the owners, shareholders, and investors. They are financed by private money from shareholders And bank loans. Public sector organisations are owned by the government. They operate on the principle to serve, help and protect people, most commonly on a not-for-profit basis
Define the term unincorporated
An unincorporated business, such as a sole trader or a partnership, is a business that hasn’t been registered as a legal entity separate from its owner.
Define the term incorporated
Incorporation is the legal process used to form a corporate entity or company. A corporation is the resulting legal entity that separates the firm’s assets and income from its owners and investors.
What is the difference between a plc and Ltd
A public limited company (PLC) is an organisation that is owned by shareholders, and managed by directors. Members of the public can purchase stock, and most pay out dividends once or twice a year. A private limited company (Ltd) does not publically trade shares and is limited to a maximum of fifty shareholders.
Define the term ordinary share capital
Ordinary share capital refers to the amount of finance raised through selling shares to shareholders. Businesses usually use ordinary share capital as a source of long-term finance.
Define divided
the percentage of a company’s earnings that is paid to its shareholders as their share of the profits.
Define dividend
the percentage of a company’s earnings that is paid to its shareholders as their share of the profits.
What are the advantages and disadvantages of dividend
Advantages:
-Attractive to certain investors: Dividend stocks are particularly attractive to income-oriented investors
Disadvantages:
-Administrative burden: Dividends need to be managed and taxed, which means additional work.
How can you calculate market capitilasation
Current Share Price * Total Number of Shares Outstanding
How to calculate share capital
multiplying the number of shares issued by the price per share
What is a shareholder
a person or institution that has invested money in a corporation in exchange for a “share” of the ownership
Identify the function of a shareholder
They provide finance to a company by purchasing shares in the company
evaluate the different influences on share prices
company news and performance, economic factors, industry trends, market sentiment and unexpected events such as natural disasters
evaluate quantitative and qualitative influences on investment decisions
While quantitative factors provide a clear, objective measure of an investment’s financial performance, qualitative factors offer valuable insights into the investment’s potential risks and opportunities. By considering both types of factors, investors can make more informed, confident investment decisions.
define what a non-profit organisation is with examples
A not-for-profit organization does not earn any profits for its owners. Instead, the organization donates the money it receives to help fund the organization’s objectives and goals.
include churches, public schools, public charities, public clinics and hospitals
