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23 Cards in this Set
- Front
- Back
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Proprietorship
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Unincorporated business owned by one individual
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Partnership
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unincorporated business owned by two or more persons
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Corporations
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a legal entity created by a state, and it is separate and distinct from it's owners and managers, having unlimited life, easy transferability of ownership, and limited liability.
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S Corp
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taxed as if partnerships (small business)
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C Corp
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large businesses
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LLC and LLp
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limited liability like corporations, but are more like partnerships
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Proprietorship and partnership advantages and disadvantages
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adv - ease of formation, few regulations, no corporate taxes
dis - difficult to raise capital, unlimited liability, limited life |
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Corporations advantages and disadvantages
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adv - unlimited life, easy ownership transfer, easy to raise capital
dis - double taxation, cost of set up and report filing |
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LLC's and LLPs disadvantages and advantages
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adv - limited liability, investors have vote in the company
dis - difficult in setting up, difficult to raise capital |
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the goal of a company
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the primary goal of a company is to maximize the long run value of the firms common stock
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Value of a company
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the present stream of cash flows that the asset provides its owners over time
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Intrinsic value
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your opinion of a stock price
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Market price
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the traded stock price
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Equilibrium
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when actual market price equals the intrinsic value
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Managers vs stockholders
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managers are inclined to act in their own best interest, which may not be the best interest of the stock holders
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Stockholders vs bondholders
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stockholders receive a bigger benefit in big company wins
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Primary market transaction
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when new stock is issued from a company
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Secondary market transaction
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transactions in which no new stocks are created
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Balance sheet
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provides snapshot of a firm's financial position at one point in time
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Income statement
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summarizes a firm's revenues and expenses over a given period of time
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Statement of cash flows
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reports the impact of a firm's activities on cash flows over a given period of time
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Statement of stockholders equity
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shows how much of the firm's earnings were retained, rather than paid out as dividends
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Marginal tax rate
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the tax rate on the last dollar of income
-start at 10% and rise roughly to 35% |
