mie 201 - ch 4

sole proprietorship

one owner, individual income taxes, unlimited liability. owned by a single individual/easiest way to conduct a business.

partnership

two or more oweners, individual owners’ income taxes, liability is dependent on the form of partnership. easy way for 2 individuals to conduct business.

corporation

any number of shareholders, corporation and shareholder taxed, limited liability. used by a legal entity with shareholders or stockholders

s corporation

up to 100 shareholders, taxed as a partnership, limited liability, used by a legal entity with tax advantages for restricted number of shareholders

limited liability company

unlimited number of shareholders, taxed as a partnership, limited liability, avoidance of personal lawsuits

domestic corporation

conducts business in state in which it is chartered

foreign corporation

conducts business outside state in which it is chartered

ailen corporation

conducts business outside nation in which it is incorporated

private corporation

owned by just one or a few people, no stock sold to the public, not required to disclose financial information publicly

public corporation

anyone may buy, sell or trade stock

ipo

the process where a private company sells shares of stock to the public for the first time, transitioning into a publicly traded company

quasi-public corporation

owned and operated by government, provides service but often operates at loss

nonprofit corporation

focuses on providing service rather than earning profit, not gov owned

elements of a corporation

board of directors, preferred stock, common stock

board of directors

responsible for meeting obj on schedule, legally liable for mismanagement or misuse, important duty is hiring corporate officers, inside and outside directors

preferred stock

have first claim to profits. dividend payments on preferred stocks are usually fixed % of initial price.

common stock

have voting rights, yet no preferential treatment re: dividends. may vote by proxy, have preemptive rights, can buy new shares of stock

horizontal merger

firms that make and sell similar products to same customers

vertical merger

companies operating at different but related levels of an industry

conglomerate merger

firms in unrelated industries

hostile takeover

acquisition of another company against the wishes of management

leveraged buyout (LBO)

acquisition of a company’s publicly traded stock, using funds that are primarily borrowed. usually with the intent of using some of the acquired assets to pay back the loans used to acquire the company.