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71 Cards in this Set
- Front
- Back
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What are the three general forms of organization of businesses
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1. proprietorship
2. partnership 3. coorporation |
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owned by a single owner
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proprietorship
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owned by two or more partners
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partnership
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owned by share holders
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coorporation
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benefit of having a proprietorship
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profits are taxed once
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cost of having a proprietorship
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unlimited liability
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benefit of having a partnership
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profits are only taxed once
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cost of having a partnership
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unlimited liability- you may only own 1/3 of the business but if you are the only one with any money as soon as the business has a loss people come to you for all of the money
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benifit of owning a coorporation
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very limited liability
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cost of owning a coorporation
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profits are taxed twice
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who owns a coorporation
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the shareholders
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who gives general guidance to CEO
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the board of directors
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who runs the coorporation
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the CEO- cheif executive officer
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why do coorporations issue stock
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to raise funds for themselves
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which tax is lower the tax on dividends or the tax on income
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tax on dividends until 2010
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when stock is sold and there is a profit made
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capital gain
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when stock is sold and income is lost; you payed more than what it sold for
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capital loss
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what are the only times there can be a capital gain or a capital loss?
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when stock is sold
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When you sell stock when is it required that a tax be payed?
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capital gain is the only time that stock is taxed
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How can a coorporation have a double tax?
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The company pays a tax for its profit. When dividends are sent to owners, owners must pay a tax for their own profits made.
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Value of stock outstanding; the value it cost to control the entire company
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market capitalization
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equation to calculate market capitalization
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price X # of shares = market capitalization
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what changes more the number of shares or the price?
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the price changes more than the number of shares
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EPS
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earnings per share
average of the year profit |
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earnings
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profit
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often is a dividend payed off
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generally once a quarter or every three months
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what is the extra money left over after all dividends have been payed off generally used for
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retained and reused; generally reinvested back into the company
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equation for the dividend yeild
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(dividend/ price of share)X100
= dividend yeild |
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dividend yeild
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for every dollar that is invested into the company yo will get the percent yeild worth of incomes
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PE stands for
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price earning ration
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PE
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for every dollar earned you are willing to pay the price earning times that
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what does price earning reflect
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how rapidly investors expect the profit to grow
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equation for price earnings ratio
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(price/earning)= PE ratio
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equation for total cost
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Total cost= fixed cost + variable cost
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what is a production function
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f(inputs/cost)=outputs
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Value of stock outstanding; the value it cost to control the entire company
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market capitalization
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equation to calculate market capitalization
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price X # of shares = market capitalization
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what changes more the number of shares or the price?
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the price changes more than the number of shares
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EPS
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earnings per share
average of the year profit |
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earnings
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profit
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often is a dividend payed off
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generally once a quarter or every three months
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what is the extra money left over after all dividends have been payed off generally used for
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retained and reused; generally reinvested back into the company
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equation for the dividend yeild
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(dividend/ price of share)X100
= dividend yeild |
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dividend yeild
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for every dollar that is invested into the company yo will get the percent yeild worth of incomes
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PE stands for
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price earning ration
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PE
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for every dollar earned you are willing to pay the price earning times that
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what does price earning reflect
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how rapidly investors expect the profit to grow
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equation for price earnings ratio
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(price/earning)= PE ratio
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equation for total cost
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Total cost= fixed cost + variable cost
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what is a production function
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f(inputs/cost)=outputs
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period of time over which at least one input is fixed- one input can not change
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short run
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period of time long enough so that all inputs are variable
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long run
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resources involved in business outputs
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labor-L
capital-K land entreprenuership |
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equation for marginal product of labor
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MPlab= change in Q/ change inL
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how much extra output one more worker will get for the business
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marginal product of labor
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equation for total cost
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total cost= variable cost + fixed cost
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what results from more workers being highered
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1. increased specialization
2. more workers(variable input) who are working with a fixed amount of capital |
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What is the equation for average fixed cost
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FC/C= AFC
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equation for average variable cost
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AVC = VC/ Q
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equation for average total cost
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ATC=TC/ Q
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Easy equation for ATC
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ATC= AFC+AVC
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equation for marginal cost
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MC= change in TC/ change in Q
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if marginal__anything__is greater than the average __(same word)__then the average increase
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marginal/average relationship
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cost payed in money
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explicit cost
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cost not payed in money
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implicit cost
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Explicit cost include
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Labor-wage
capital-interest land-rent |
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implicit cost include
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entrapreneurship-normal/average profit
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implicit cost+ explicit cost=
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total cost
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perfect competition
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-lots of firms, lots of buyers
-no barriers, no entry -each firm makes identical profit |
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what are some barriers to entry in a business competition
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legal barriers- patents copyrights, public franchise
cost barriers-natural monopoly |
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whose profits get taxed twice
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coorporations
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