3.1 what Is Business Flashcards
(34 cards)
Why do shareholders buy shares in a plc and an ltd
For dividends and share value
What is market capitalisation
The total value of a company’s outstanding shares of stock (current share price times total number of shares outstanding)
What is ordinary share capital
The money a company raises by issuing common stock to investors
What is a sole trader
One person who sets up and runs a business by themselves
Two pros and two cons of a sole trader
+ don’t have to share profit with other owners
+ full control over all decisions
- unlimited liability
- limited growth and finance
What is is unlimited liability
Business is personally liable for any debts or legal issues, personal assets and at risk
What is limited liability
When a business’s owners personal assets are protected, not at risk
What is a private limited company
Structure in which ownership of the company is divided into shares
Two pros and two cons of an ltd
+ limited liability
+ access to capital (sell shares to investors)
- ownership restrictions (number of shareholders limited)
- shares cannot be freely traded on stock exchange
What is a public limited company
Company whose shares are publicly traded on stock exchange
Two pros and two cons of a plc
+ limited liability
+ shares traded on stock exchange
- vulnerable to market pressure
- high regulation costs and compliance costs
What is a non-for-profit business
A business that main objective does not involve making a profit (charity)
What is a mutual business
Business is owned and controlled by its members rather than external shareholders
What are 4 benefits business’s bring to the economy
- Employment opportunities
- Economic growth
- Tax revenue
- Infrastructure development
What area main aims and objectives
- Profit maximisation
- Growth and expansion
- Customer satisfaction
- Market leadership
- Sustainability (ethically responsible)
What is a cost and give an example
A cost is something of a business needs to pay in order to survive
(Wages/rent/raw materials)
What is a fixed cost
Costs that don’t change delisted output (rent)
What is a variable cost
Costs that change due to output (raw materials)
How do you get total costs
Variable costs + fixed costs
What is a good
A physical product (food)
What is a service
A non physical product (taxi/hairdresser)
What is primary sector
Extraction of raw materials (agriculture)
What is secondary sector
Manufacturing/ processing (automobile manufacturing)
What is the tertiary sector
Providing a service (education)
