CHAPTER%2011%20POWER%20POINT%202009

CHAPTER%2011%20POWER%20POINT%202009 - Chapter 11...

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1 Chapter 11 SHAREHOLDER’S EQUITY
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2 FORMS OF BUSINESSES -CORPORATION -PARTNERSHIP general partner-day to day decisions limited partner-silent partner, but also has limited liability -SOLE PROPRIETOR
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3 CORPORATIONS vs. PARTNERSHIP Limited liability Unlimited Liability Lower tax rate Co. pays tax rate at rate of owner - 22% small business -could be as high as 50% -45% large business Double taxation -Taxed at corporate level -Taxed at a personal level. -Taxed again when dividend paid to owner. Or salary paid. -Mandatory reports, returns -Less paper work. -Easier to raise funds -More control
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4 OWNERSHIP SHARE CAPITAL COMMON STOCK / COMMON SHARES SHAREHOLDERS RIGHTS 1.VOTING RIGHTS; ELECT THE BOARD OF DIRECTORS -B of D select management . 2. RIGHT TO DIVIDENDS- Profits of company 3. RIGHT TO CLAIM ASSETS BASED ON % OWNERSHIP IN CASE CORPORATION LIQUIDATES. 4. PREEMPTIVE RIGHT
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5 SHARE CAPITAL 1.COMMON SHARES 2.PREFERRED SHARES (SHOWN 1ST ON BALANCE SHEET) PREFERRED SHARES 1-DIVIDENDS ARE PAID FIRST TO PREFERRED SHAREHOLDERS 2-PRIORITY TO PREFERRED SHAREHOLDERS UPON LIQUIDATING THE CORPORATION. 3- NO VOTING RIGHTS
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6 PREFERRED SHARES CHARACTERISTICS 1.PREFERRED SHAREHOLDERS PAID FIRST 2. CUMULATIVE SHARES- DIVIDENDS NOT DECLARED IN ONE YEAR ARE CALLED “DIVIDENDS IN ARREARS” =THEY WILL BE PAID IN FUTURE WHEN CORPORATION HAS THE FUNDS. PREFERRED SHARES PAID DIVIDENDS OF CURRENT AND PREVIOUS YEARS, BEFORE COMMON SHAREHOLDERS. 3.NON-CUMULATIVE SHARES- UNDECLARED DIVIDENDS DO NOT BECOME “DIVIDENDS IN ARREARS”, RATHER DIVIDEND IS LOST.
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7 4.CONVERTIBLE SHARES CAN CONVERT FROM PREFERRED SHARE TO COMMON SHARE. 5. REDEEMABLE CORP. HAS THE RIGHT TO CALL IN OR BUY BACK SHARES AT A PREDETERMINED DATE AND PRICE. 6. RETRACTABLE SHAREHOLDER HAS THE RIGHT TO FORCE THE CORP. TO CALL IN OR BUY BACK SHARES AT A PREDETERMINED DATE AND PRICE.
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8 SHARE CAPITAL SHARES ARE PAR VALUE OR NO PAR VALUE. PAR VALUE = $ AMOUNT STAMPED ON CERTIFICAT. (NOT USED ANY MORE) EXAMPLE ; MATT CO. ISSUED 10000 SHARES FOR $15.00 A SHARE NO PAR VALUE SHARES DR CASH 150,000 CR COMMON SHARES 150,000
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DIVIDENDS 1. CASH DIVIDEND 2. STOCK DIVIDEND CASH DIVIDEND THE BOARD OF DIECTORS DECIDE WETHER OR NOT TO PAY DIVIDEND TO SHARE HOLDERS. LOOK AT : - THE RETAINED EARNINGS - CASH BALANCE PAY DIVIDEND: IT IS IMPORTANT TO KEEP S/H HAPPY, BUT NOT BY CREATING CASH FLOW PROBLEMS. LOW PAYING DIVIDEND
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CHAPTER%2011%20POWER%20POINT%202009 - Chapter 11...

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