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6 Cards in this Set
- Front
- Back
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Proprietorship
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An unincorporated business owned by one individual
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Limitations with Proprietorship
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1. It may be difficult to obtain the capital needed
2. Has unlimited personel liability for the business 3. The life of a proprietorship is limited to the life of its founder. |
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A succeful company must have the following three attributes to remain successful
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1. Skilled people
2. Strong external relationships 3. Sufficient capital To be successful- a company must meet its first main goal: identifying, creating, and delivering highly valved products and services to customers. |
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Corporation is a legal entity created under state laws, and it is separate and distinct from its owners and managers.
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Advantages:
1. Unlimited life - a corporation can continue after its orginal owners and manages are decreased 2. Easy tranferability of ownership interest-ownership interests are divided into shares of stock, which can be transferred far more easily than can proprietorship or partnership interest 3. Limited liability-losses are limited to the actual funds invested. |
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Free cash flows (FCF)
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FCF= Sales revenues - Operating Costs - Operating taxes - Required investments in new operating captial.
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Weighted average cost of capital (WACC).
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FCF1/(1+WACC)1 + FCF/2(1+WACC)2 + FCF3/(1+WACC)3 + FCF8/(1+WACC)8
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