3.1 What is a business Flashcards
(15 cards)
How much share capital does a PLC need
– they need over £50,000 of share capital, and if they are listed on the stock exchange, at least 25% of this must be publicly available
What is ordinary share capital
Ordinary share capital is the original value of shares sold
What is market capitalisation
Market capitalisation is the current total value of all the ordinary shares issued by a company
Market cap formula
Numbers of issued shares X
Current share price
What is a mission statement? And what do they tell you?
A mission statement is a written description of the main corporate aims. Mission statements tell you the purpose of the business and include information such as its values, standards, strategy, who the customers are and what makes the business unique.
What are corporate objectives?
Corporate objectives are the goals of the business as a whole.
Give 7 examples of business objectives
1) Profit maximisation
2) Growth
3) Survival
4) Maximise quality
5) Society
6) Satisficing
7) Market share
revenue formula
sELLING price X n.o of units sold
What are the equations for profit?
Total revenue − Total costs
OR
Total contribution − Fixed costs
What is the equation for total variable cost?
Variable costs (Total variable costs) = Variable cost per unit × Number of units sold
What’s the formula for market share?
(sales of 1 product or brand business) / total sales in a market
X100
6 Reasons why a shareholder would invest in thr company
– Some shareholders invest in businesses in order to achieve a capital gain
– shareholders may be paid a dividend in return for their investment
– shareholders want to be involved in the running of the business
– Shareholders will invest because they believe in the aims and objectives of the company and want it to succeed
– A shareholder might invest in a private limited company in order to help the company grow or survive
– they may be a venture capitalist, they will take a big financial risk but to lead to a large financial reward
Whats ordinary share capitl
Ordinary share capital is the original value of shares sold
WHat does incorporated business mean? ex?
Legal identity thats separate from the owners
Eg . PLC AND LTD
Unincorporated
identity of business and owner is the same EG sole trader+partnership
