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Business > 3.1.2 > Flashcards

3.1.2 Flashcards

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1
Q

Ordinary capital is also known as

A

Equity

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2
Q

Ordinary share capital is

A

The most common and most risks type of share

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3
Q

Why is ordinary share capital the most risky type of share

A

There is no guaranteed dividend

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4
Q

What is market capitalisation

A

The value of company

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5
Q

Market capitalisation formula

A

Share price ×number of shares

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6
Q

Dividends are

A

The share of profits paid out by a company to share holders

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7
Q

What can have an impact on mission, objectives, decisions and performance

A

Type of ownership

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8
Q

What are two important factors to consider between owners

A

Those who take a short term or long term view and the impact of the divorce of ownership from control

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9
Q

What do share holders own

A

A number of shares in a limited company

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10
Q

Share holders are

A

Joint owners if the company and can vote on some company matters

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11
Q

What do shareholder’s get

A

Take a share of profits in the form of dividends

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12
Q

Share holders hope for

A

A rise In value of shares over time

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13
Q

What are the two principle factors by which share price is influenced

A

The performance of the company that has issued the shares and the wider economic environment

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14
Q

A sole trader is

A

A business that is owned and managed by one person

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15
Q

A soke trader is an uncorrelated business and there for has

A

Unlimited liability

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16
Q

Pros of a sole trader

A

Quick and easy to set up, keep all profits, owner makes all decisions

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17
Q

Cons of a sole trader

A

Unlimited liability, harder to raise finances, cannot share ideas or experience

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18
Q

A private limited company (ltd) is a

A

Business that sells shares privately between family and friends or acquaintances

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19
Q

An Ltd is an incorporated business and therefore has

A

Limited liability

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20
Q

Pros of an ltd

A

Limited liability, more access to finance, business is more established

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21
Q

Cons of an ltd

A

Complicated set up, can only sell shares privately

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22
Q

A public limited company (plc) is

A

A business that sells shares publicly on the stock market

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23
Q

A plc is an incorporated business and therefore is

A

Limited liability

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24
Q

Pros of a plc

A

Limited liability, Greater access to finance, plcs are considered a safe business

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25
Cons of a plc
Expensive and complicated float on the stock market, Separation if ownership from control, can't always control who buys shares so may be subject to hostile take overs
26
A non profit organisation is
A business that operates for social good eg charity
27
Pros of a non profit organisation
Staff generally more motivated, owners earn a living doing something valuable
28
Cons if a non profit organisation
Some profit goes to social aim, employees will not earn a great deal
29
A private sector organisation is
One that is owned by individuals eg asda, ford
30
A public sector organisation is one
That is owned by the government eg NHS, new college
31
What is privatisation
The process under which the state sells businesses that were previously owned by private individuals and businesses eg Royal mail
32
Unlimited liability is
Occurs when an individual is personally responsible for all of the actions of the business and could lose their personal possessions to cover business debts
33
Limited liability
Means that in the event of financial difficulties, the personal belongings of shareholders are safe
34
Ordinary capital share
Is the money by a business through the issue of shares
35
Market capitalisation is
The total amount of value issued in shares of a public limited company eg qpples market capitalisation is £535.61bn
36
Dividends are
The profit rewards distributed between shareholders
37
Entrepenues must choose what for a business
A structure
38
Structure defines what responsibilities
Legal responsibility
39
Some examples of legal responsibility are
Paperwork to fill in to get started The taxes they will manage and pay How they can personally take the profit their business makes Their personal responsibilities if their business makes a loss
40
Businesses can change business structure after their startup to
Find a new structure that suites them better this often happens when the business expands or grows
41
Major decisions which could effect on the shareholders rights are usually required
To be approved by shareholders in a general meeting this is called by the directors of the company.
42
Share holders have limited control over who
Directors of the company
43
Share holders main role are
To attend meeting and discuss what ever is on the agenda to egenda to make sure directors do not go beyond their powers
44
Shares are designed to provide investors with two types of return
Annual income and long term capital growth
45
Most shares offer income jn the form of
Dividends
46
Dividends are typically paid
Twice a year
47
Dividends can be seen as a reward to who
Shareholders
48
Dividends are paid when
A company is profitable and has cash in the bank after it has satisfied obligations
49
The more profitable a company is
The higher the dividend payments
50
Significant dividend payments are a good or bad investment and why
Good so the share price rises
51
Investment programs are often used when
Early stages and if successful their share price will increase substantially
52
Log term capital growth comes about when
Share price increases over a period of time
53
What are the two principle factors that share prices can be effected by
Performance of the company that has issued the shares and the wider economic environment.
54
Listed companies public their finances when
Twice a year
55
Trading updates are published
Twice a year
56
Results and updates and statements can give invite to what
A companies performance
57
Companies are obliged to what
Post notify any event that could effect their share price such as take over bid or new product launch
58
If economic conditions are good investors feel
Confident
59
Companies are more likely to perform better if tge economic climate is
Benign
60
If the economic environment is benign then
They are more likely to pay rising dividends
61
When the economic climate is benign what tend to rise
Demand for shares and prices
62
If economic climate is difficult investors feel
Nervously
63
When economic climate is difficult feasible about future profits to reduce demand for shares may
Fall
64
In tough times robust companies may
See their price fall even if they are doing well
65
Companies may benefit from a rising
Market and there share price may go up even if the underlying business is lack luster
66
Public sector organisation that are focused meeting social needs and providing essential services will often aim to provide value for money services that may not be profitable however
They will still need strong leadership in order to ensure tight finances and efficiently run operations
67
Non profit organisation need strong leadership and well trained staff to
Ensure they can generate surpluses reinvest in their organisation and support the cause they are promoting
68
Moat private sector organisations aim to
Maximise their prifit for their owners
69
Plcs sole traders and partnerships take into what as they expand
Take additional partners and share holders into account
70
Share holders may want short term profits to
Boost dividends
71
Managers may prefer strategies that lead to longer term success of the company which mean
Lower profits in the short term and medium term
72
The pursuit if short term profits in share holders and long term strategies for managers is called
Divorce of ownership and control

Business (4 decks)

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