Chap2_2009 - Chapter 2 The Business, Tax, and Financial...

Info iconThis preview shows pages 1–11. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 2 The Business, Tax, and Financial Environments
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Learning Objectives After studying Chapter 2, you should be able to: 1. Describe the four basic forms of business organization in the United States -- and the advantages and disadvantages of each. 2. Understand how to calculate a corporation's taxable income and how to determine the corporate tax rate - both average and marginal. 3. Understand various methods of depreciation. 4. Understand why acquiring assets through the use of debt financing offers a tax advantage over both common and preferred stock financing. 5. Describe the purpose and make up of financial markets. 6. Demonstrate an understanding of how letter ratings of the major rating agencies help you to judge a security’s default risk. 7. Understand what is meant by the term “term structure of interest rates” and relate it to a “yield curve.”
Background image of page 2
Chapter 2 Topics • The Business Environment • The Tax Environment • The Financial Environment
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Business Environment The U.S. has four basic forms of business organization: Sole Proprietorships Partnerships (general and limited) Corporations Limited liability companies
Background image of page 4
The Business Environment: Sole Proprietorship Oldest form of business organization. Business income is accounted for on your personal income tax form . Sole Proprietorship -- A business form for which there is one owner. This single owner has unlimited liability for all debts of the firm.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Advantages • Simplicity • Low setup cost • Quick setup • Single tax filing on individual form Disadvantages – Unlimited liability – Hard to raise additional capital – Transfer of ownership difficulties The Business Environment: Sole Proprietorship
Background image of page 6
• Business income is accounted for on each partner’s personal income tax form . Partnership -- A business form in which two or more individuals act as owners. The Business Environment: Partnership
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Types of Partnerships Limited Partnership -- limited partners have liability limited to their capital contribution (investors only). At least one general partner is required and all general partners have unlimited liability. General Partnership -- all partners have unlimited liability and are liable for all obligations of the partnership.
Background image of page 8
Summary for Partnership Advantages • Can be simple • Low setup cost, higher than sole proprietorship • Relatively quick setup • Limited liability for limited partners Disadvantages • Unlimited liability for the general partner • Difficult to raise additional capital, but easier than sole proprietorship • Transfer of ownership difficulties
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Corporation • An artificial entity that can own assets and incur liabilities. • Business income
Background image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/06/2009 for the course BUS BAM314 taught by Professor Na during the Spring '09 term at 東京大学.

Page1 / 48

Chap2_2009 - Chapter 2 The Business, Tax, and Financial...

This preview shows document pages 1 - 11. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online