Chapter 5

Question 1

Analytics

Answer 1

Computing tools and techniques used to analyze big data, major types include data mining, text mining and predictive analytics

Question 2

Unlimited liability

Answer 2

A legal condition under which any damages or debts incurred by a business are the owner’s personal responibility

Question 3

Sole proprietorship

Answer 3

A business owned by a single person

Question 4

Partnership

Answer 4

An unincorporated company owned by two or more people

Question 5

General partnership

Answer 5

A partnership in which all partners have joint authority to make decisions for the firm and joint liability for the firm’s financial obligations

Question 6

Limited partnership

Answer 6

A partnership in which one or more persons act as general partners who run the business and have the same unlimited liability as sole prorietors

Question 7

Limited liability

Answer 7

A legal condition in which the maximum amount each owner is liable for is equal to whatever amount each invested in the business

Question 8

Corporation

Answer 8

A legal entity, distinct from any individual persons, that has the power to own property and conduct business

Question 9

Shareholders

Answer 9

Investors who purchase shares of stock in a corporation

Question 10

Public corporation

Answer 10

A corporation in which stock is sold to anyone who has the means to buy it

Question 11

Liquidity

Answer 11

A measure of how easily and quickly an asset such as corporate stock can be converted into cash by selling it

Question 12

S corporation

Answer 12

A type of corporation that combines the capital-raising options and limited liability of a corporate with the federal taxation advantages of a partnership

Question 13

Limited liability company (LLC)

Answer 13

A structure that combines limited liability with the pass-through taxation benefits of a partnership; the number of shareholders is not restricted, nor is members’ participation in management

Question 14

Benefit corporation

Answer 14

A profit-seeking corporation whose charter specifies a social or environmental goal that the company must pursue in addition to profit

Question 15

Board of directors

Answer 15

A group of professionals elected by shareholders as their representatives with responsibility for the overall direction of the company and the selection of top executives

Question 16

Corporate governance

Answer 16

In a broad sense, all the policies, producers, relationships and systems in place to oversee the successful and legal operation of the enterprise; in a narrow sense, the responsibilities and performance of the board of directors specifically

Question 17

Proxy

Answer 17

A document that authorizes another person to vote on behalf of a shareholder in a corporation

Question 18

Shareholder activism

Answer 18

Activities undertaken by shareholders (individually or in a group) to influence executive decision-making in areas ranging from strategic planning to social responsibility

Question 19

Corporate officers

Answer 19

The top executives who run a corporation

Question 20

Chief executive officer (CEO)

Answer 20

The highest-ranking officer of a corporation

Question 21

Merger

Answer 21

An action taken by two companies to combine in a single entity

Question 22

Acquisition

Answer 22

An action taken by one company to buy a controlling interest in the voting stock of another company

Question 23

Hostile takeover

Answer 23

Acquisition of another company against wishes of management

Question 24

Leveraged buyout (LBO)

Answer 24

Acquisition of a company’s publicly traded stock, using funds that are primarily borrowed, usually with the intent of using to pay back the loans used to acquire the company

Question 25

Strategic alliance

Answer 25

A long-term partnership between companies to jointly develop, produce or sell products

Question 26

Joint venture

Answer 26

A separate legal entity established by two or more companies to pursue shared business objectives

Question 27

Big data

Answer 27

The massive data sets that companies collect and analyze to find important trends and insights

Question 28

What are the key advantages of a partnership?

Answer 28

Simplicity, single layer of taxation, more resources, cost sharing, broader skill and experience base, and longevity

Question 29

What are the potential disadvantages of a partnership?

Answer 29

Unlimited liability for general partners, potential conflict, and expansion, succession and termination issues

Question 30

Private corporation

Answer 30

A corporation in which stock is owned by only a few individuals or companies and is not made available for purchase by the public

Question 31

What are the advantages of a corporation?

Answer 31

Ability to raise capital by selling shares of ownership, liquidity, longevity, and limited liability

Question 32

Disadvantages of a corporation?

Answer 32

Start-up costs and complexity, ongoing reporting requirements, extra demands on top managers, potential loss of control, double taxation, and the shot-term orientation of the stock market

Question 33

Three groups that are responsible for the governance

Answer 33

The shareholders who elect, the board of directos, and the corporate officers