Types of business organisations Flashcards
Limited companies (9 cards)
What is a private limited company?
A private limited company sells shares privately to invited members.
What is a public limited company?
A public limited company sells shares to the public and many are listed on the stock market.
What is an advantage of being a limited company?
Limited liability means that if the company fails, the investors in a limited company are protected, so they only lose their original investment (the share capital).
What does limited liability mean for investors?
Investors are not personally liable for the debts of the business, so they are not at risk of having to sell personal assets.
How can limited companies raise more money?
Limited companies can raise more money than sole traders or partnerships by borrowing through the share issue of ordinary shares.
What is a financial advantage of larger limited companies?
Larger limited companies are often able to raise larger amounts of finance through borrowing.
What is a disadvantage of being a public limited company?
Shareholders own a Plc but directors control it, which may lead to decisions that shareholders disagree with.
What threat exists when the public can buy shares in a company?
There is a threat that someone will buy enough shares to take over the whole company.
What is a challenge for shareholders in a public limited company?
Shareholders generally want to make as much profit as possible, making it difficult to pursue other objectives, such as providing quality service or acting ethically.
