chapter 8 econ

Sole proprietorship disadvantages

-owners have unlimited liability, the owner is personally and fully responsible for losses and debt of the business -difficulty raising financial capital for business -low size and efficiency, may not be able to hire many workers -limited life, if owner dies, business dies

Initial public offering (IPO)

a type of public offering by a particular corporation that is for the first time going public to investors. At this initial stage the corporation evaluates the price per share for their investors

Change

indicates the difference between what the last trade price is and what the price before that was.

Cooperative

jointly owned enterprise engaging in the production or distribution of goods or the supplying of services, operated by its members for their mutual benefit, typically organized by consumers or farmers

Business organization

an enterprise that provides goods or services usually in order to make profit

Nonprofit organization

n organization with the purpose of which is something other than making a profit. A nonprofit organization is often dedicated to furthering a particular social cause or advocating for a particular point of view

Corporation

recognized by law as a separate legal entity having all the rights of an individual, this gives the corporation the right to buy and sell property, enter into legal contracts and to sue and be sued

Partnership

a business jointly owned by two or more people

Sole proprietorship

a business owned by one person, most common form of business organization, no requirements

Public company

a company whose shares are traded freely on a stock exchange

Unlimited life

a company will operate forever unless it is formally dissolved

shares outstanding

a company's stock currently held by all its shareholders including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders

Net income

a company's total earnings (or profit); net income is calculated by taking revenues and subtracting the costs of doing business such as depreciation, interest, taxes and other expenses

Mergers

a corporate strategy of combining different companies into a single company in order to enhance the financial and operational strengths of both organizations.

Limited liability

a corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities

Dividend

a payment made by a corporation to its shareholders

bid/ask

the amount by which the ask price exceeds the bid price for an asset in the market. The bid-ask spread is essentially the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept to sell it.

price earning ratio

the amount of money you earn per share. the lower the ratio the better

Stocks

the capital raised by a business or corporation through the issue and subscription of shares

52-week high/low

the highest and lowest price of a stock over the span of a year

previous close

the last share of a stock sold yesterday or the last day of trading

volume

the number of shares or contracts traded in a security or an entire market during a given period of time.

Open

the price at stock is first sold on a day to day basis

Franchise

the right to sell a company's goods or services in a particular area; also : a business that is given such a right

Cash flow

the total amount of money being transferred into and out of a business, especially as affecting liquidity.

Conglomerates

a corporation that is made up of a number of different, seemingly unrelated businesses. In a conglomerate, one company owns a controlling stake in a number of smaller companies, which conduct business separately.

Sole proprietorship advantages

-easy to set up -you're the boss -all profit is yours -no separate income tax -only individual income tax

general partnership

A general partnership is an arrangement by which partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership's obligations.

limited liability partnership

A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence.

limited partnership

A limited partnership (LP) is a form of partnership similar to a general partnership, except that where a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited partner.

private company

A privately held company or close corporation is a business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately.

Day high/low

Highest/lowest price of a stock in one day

Last

The current price of a stock is the price in which it was last traded. This number reflects the last price that a single share of this particular stock sold at.