lecture 03 - Business Finance Lecture 3 Review of the...

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9 Business Finance Lecture 3 Review of the Previous Lecture Finance Components Significance Financial Management Decisions Capital Budgeting Capital Structure Working Capital Investment Role of Financial Manager Topics under Discussion Forms of Business Organization Proprietorship Partnership Corporation Goals of the Corporate Firm Agency Problem Firm and the Financial Markets The Corporate Firm The corporate form of business is the standard method for solving the problems encountered in raising large amounts of cash. However, businesses can take other forms. Forms of Business Organization Three major forms Sole proprietorship Partnership General Limited Corporation Limited liability company
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10 Sole Proprietorship Advantages Easiest to start Least regulated Single owner keeps all the profits Taxed once as personal income Disadvantages Limited to life of owner Equity capital limited to owner’s personal wealth Unlimited liability Difficult to sell ownership interest Partnership Two or more owners (partners) General partnership: all partners share in gains and losses and all have unlimited liability
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lecture 03 - Business Finance Lecture 3 Review of the...

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