Finance and ownership

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Finance and ownership

  1. 1. To be able to distinguish between unlimited liability and limited liability businesses Private Limited Companies 1. Sole Traders 2. Partnerships 3. Private Limited Companies
  2. 2. To be able to distinguish between unlimited liability and limited liability businesses 2 types of business Unlimited liability businesses - like sole traders and partnerships Limited liability businesses - These are called companies
  3. 3. 2 types of business To be able to distinguish between unlimited liability and limited liability businesses Unlimited liability businesses Limited liability businesses - like sole traders - These are called companies If you go bust there is no limit to what you can lose If you go bust what you lose is limited to what you put into the business
  4. 4. To be able to distinguish between unlimited liability and limited liability businesses Sole trader - Business and owner are one
  5. 5. To be able to distinguish between unlimited liability and limited liability businesses
  6. 6. To be able to distinguish between unlimited liability and limited liability businesses Company - Business and owner are separate
  7. 7. To be able to distinguish between unlimited liability and limited liability businesses
  8. 8. To be able to distinguish between unlimited liability and limited liability businesses Business Ownership What are the two ways of setting up in business? Which would you prefer? Why?
  9. 9. To be able to distinguish between unlimited liability and limited liability businesses Statement If you are a private limited company you must sell shares to raise money. The shareholders with the most shares have most control over the business. Being a shareholder is risky. If the business goes bankrupt, you may lose all your assets. Limited companies are usually bigger businesses than sole traders. T or F
  10. 10. to be able to describe different sources of finance Finance for.... Fixed assets 1. Retained profit 2. Share capital 3. Bank loan 4. Hire purchase 5. Leasing Working Capital [to help cash flow] 1. Trade credit from suppliers [creditors] 2. Overdraft from the bank [current liabilities]
  11. 11. to be able to describe different sources of finance Finance for.... Fixed assets 1. Retained profit p.85 2. Share capital p.84 p.85 3. Bank loan 4. Hire purchase p.85 5. Leasing p.85 Working Capital [to help cash flow] p.86 1. Trade credit from suppliers [creditors] 2. Overdraft from the bank p.85 [current liabilities]
  12. 12. to be able to describe different sources of finance Shareholders own the business. They put in money in return for a share in the business. At the end of each year the business hopes to make a profit. One part is kept in the business. This is called r………………. p……………… The rest is paid to shareholders as d……………….. .
  13. 13. The business cannot afford the van. So, the ……….. loans the money to …………………. The business then pays the bank …………….. The bank makes a profit by charging …………………..
  14. 14. Comparing options Raising capital by borrowing is good because ….. A disadvantage of borrowing is…. Raising capital by selling shares is good because …. A drawback however is….
  15. 15. to be able to describe different sources of finance
  16. 16. to be able to describe different sources of finance p.85
  17. 17. to be able to describe different sources of finance
  18. 18. Comparing options Buying an asset by hire purchase is good because ….. A disadvantage of hire purchase is…. Buying an asset by leasing is good because …. A drawback however is….
  19. 19. to be able to describe different sources of finance Finance for.... Fixed assets 1. Retained profit 2. Share capital 3. Bank loan 4. Hire purchase 5. Leasing Working Capital [to help cash flow] 1. Trade credit from suppliers [creditors] 2. Overdraft from the bank [current liabilities]
  20. 20. to be able to describe different sources of finance Shareholders own the business. They put in money in return for a share in the business. At the end of each year the business hopes to make a profit. One part is kept in the business. This is called r………………. p……………… The rest is paid to shareholders as d……………….. .
  21. 21. to be able to describe different sources of finance

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