Comprehensive Business and Economics Study Guide
CHAPTER 1: The World of Business and Economics
Business Definition and Profit * Business: An organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy a society's needs. * Profit: What remains after all business expenses have been deducted from sales revenue. It represents the reward for taking the risk of going into business. The basic formula is: .
Factors of Production * Natural Resources: Elements that exist in nature and can be used for economic gain, such as land, water, minerals, and timber. * Labor: The physical and mental efforts that people contribute to the production of goods and services. * Capital: The money, facilities, equipment, and machines used in the operation of a business. * Entrepreneurship: The willingness to take risks and the knowledge and ability to combine the other factors of production (natural resources, labor, and capital) to create and operate a business.
Economic Systems * Capitalism: An economic system in which individuals own and operate the majority of businesses that provide goods and services. It is based on the principle of free-market competition. * Command Economies: Systems in which the government decides what goods and services will be produced, how they will be produced, for whom they will be produced, and who owns and controls the factors of production. * Socialism: An economic system in which the key industries are owned and controlled by the government, but private ownership of smaller businesses is permitted. * Communism: A system where the government owns almost all resources and makes all economic decisions, theoretically creating a classless society. * Mixed Economy: An economy that exhibits elements of both capitalism and socialism, where individuals and government both participate in decision-making.
Supply, Demand, and Market Price * Supply: The quantity of a product that producers are willing to sell at each of various prices. * Demand: The quantity of a product that buyers are willing to purchase at each of various prices. * Market Price (Equilibrium): The price at which the quantity demanded is exactly equal to the quantity supplied. * Surplus: A situation in which the quantity supplied is greater than the quantity demanded at a certain price. * Shortage: A situation in which the quantity demanded is greater than the quantity supplied at a certain price.
Types of Markets * Perfect Competition: A market situation in which there are many buyers and sellers of a product, and no single buyer or seller is powerful enough to affect the price of that product. * Monopolistic Competition (Imperfect): A market situation in which there are many buyers along with a relatively large number of sellers who differentiate their products from the products of competitors. * Oligopoly: A market (or industry) situation in which there are few sellers, typically large companies, and the actions of any one seller can influence the market price. * Monopoly: A market (or industry) with only one seller, and there are no close substitutes for the product being sold.
The Business Cycle * Peak: The point in the business cycle when the economy is at its highest level of activity and prosperity. * Recession: Two or more consecutive three-month periods (quarters) of decline in a country's Gross Domestic Product (GDP). * Trough: The turning point in the business cycle where the economy reaches its lowest point before starting to recover. * Recovery: The phase of the business cycle in which the economy moves from a trough toward a peak/expansion.
Economic Policies * Monetary Policy: Federal Reserve decisions that determine the size of the supply of money in the nation and the level of interest rates. * Fiscal Policy: Government influence on the amount of savings and expenditures; accomplished by altering the tax structure and by changing the levels of government spending.
Business Environment * External Business Environment: Forces outside the business that affect its ability to function, including economic, legal, social, and technological factors. * Internal Business Environment: Factors within the organization, such as employees, management styles, and corporate culture.
CHAPTER 2: Small Business and Business Ownership
Small Business Definition * A small business is one that is independently owned and operated for profit and is not dominant in its field.
Franchising * Franchising Definition: A license to operate an individually owned business as though it were part of a chain of outlets or stores. * Advantages: Rapid expansion for the franchisor; proven business model, training, and support for the franchisee. * Disadvantages: Loss of control for the franchisor; high initial costs and ongoing royalty fees for the franchisee.
Business Plan * A carefully constructed guide for the person starting a business. It serves as a blueprint for the business and a tool for attracting investors.
Forms of Business Ownership * Sole Proprietorship: A business that is owned (and usually operated) by one person. * Advantages: Ease of start-up, retention of all profits, flexibility. * Disadvantages: Unlimited liability, limited financial resources, lack of continuity. * Partnership: A voluntary association of two or more persons to act as co-owners of a business for profit. * General Partner: A person who assumes full or shared responsibility for operating a business and has unlimited liability. * Limited Partner: A person who invests money in a business but has no management responsibility or liability for losses beyond the amount he or she invested. * Advantages: Combined skills, shared responsibility, relative ease of formation. * Disadvantages: Unlimited liability for general partners, potential for management disagreements. * Corporation: An artificial person created by law with most of the legal rights of a real person, including the right to start and operate a business, to buy or sell property, to borrow money, and to sue or be sued. * Advantages: Limited liability (stockholders are not responsible for corporation debts past their investment), ease of transferring ownership, unlimited life. * Disadvantages: Difficulty and cost of formation, double taxation, government regulation. * S Corporation: A variation of a regular corporation that is taxed as though it were a partnership (profits are taxed only as the personal income of stockholders). * LLC (Limited-Liability Company): A form of business ownership that combines the benefits of a corporation (limited liability) and a partnership (taxed like a partnership).
Liability Issues * Limited Liability: Financial responsibility restricted to the amount invested in a business. * Unlimited Liability: Legal provision that holds a business owner personally responsible for all the debts of the business.
Corporate Combinations * Merger: The combination of two corporations or other business entities to form one unit. * Acquisition: The purchase of one organization by another. * Horizontal Merger: A merger between firms that make and sell similar products or services in similar markets. * Vertical Merger: A merger between firms that operate at different but related levels in the production and marketing of a product. * Conglomerate Merger: A merger between firms in completely unrelated industries.
CHAPTER 3: Business Ethics and Social Responsibility
Ethics and Foundations * Ethics: The study of right and wrong and of the morality of the choices people make. * Business Ethics: The application of moral standards to business situations.
Ethical Decision-Making Approaches * Utilitarian Approach: Ethical decisions are made to provide the greatest good for the greatest number of people. * Moral Rights Approach: Decisions should be made while respecting the fundamental rights of human beings. * Justice Approach: Ethical decisions should be consistent with the principles of equity, fairness, and impartiality. * Care Approach: Decisions are based on the importance of maintaining relationships and caring for others.
Approaches to Social Responsibility * Obstructionist Approach: A company does as little as possible to solve social or environmental problems and may actively resist efforts. * Defensive Approach: A company does only what is legally required but nothing more. * Accommodative Approach: A company meets its legal and ethical requirements but will also go further in certain cases if asked. * Proactive Approach: A company actively seeks opportunities to contribute to the well-being of society and the environment.
Fostering Ethical Behavior * Leadership: Management leading by example and setting high ethical standards. * Code of Ethics: A written guide to acceptable and ethical behavior as defined by an organization. * Training: Educating employees about ethical standards and decision-making. * Social Audit: A report that measures the company’s performance relative to its social objectives. * Whistle-blowing: Informing the press or government officials about unethical or illegal practices within one's organization.
Unethical Business Practices * Price Gouging: Over-pricing essential goods during a crisis. * Collusion: Secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others or fix prices. * Discrimination: Unfair treatment of a person or group on the basis of prejudice.
CHAPTER 4: Exploring Global Business
Economic Advantages * Absolute Advantage: The ability of a country to produce a specific product more efficiently than any other nation. * Comparative Advantage: The ability of a country to produce a specific product more efficiently than any other product.
Trade Barriers and Regulations * Import Duty (Tariff): A tax levied on a particular foreign product entering a country. * Dumping: Exporting a large quantity of a product at a price lower than that of the same product in the home market (or below the cost of production). * Anti-dumping Laws: Laws designed to prevent dumping and protect domestic industries.
Measuring Trade * Balance of Trade: The total value of a nation's exports minus the total value of its imports over some period of time. * Balance of Payments: The total flow of money into a country minus the total flow of money out of that country over some period of time. * Trade Deficit: A negative balance of trade where imports exceed exports. * Trade Surplus: A positive balance of trade where exports exceed imports.
Nontariff Barriers * Import Quota: A limit on the amount of a particular good that may be imported into a country during a given period of time. * Embargo: A complete halt to trading with a particular nation or in a particular product.
Global Organizations * General Agreement on Tariffs and Trade (GATT): An international organization of nations dedicated to reducing or eliminating tariffs and other barriers to free trade. * World Trade Organization (WTO): The successor to GATT; an international organization with the power to settle trade disputes and monitor trade policy. * International Monetary Fund (IMF): An international bank with approximately member nations that makes short-term loans to developing countries experiencing balance-of-payment deficits. * World Bank (WB): An international organization providing financing, advice, and research to developing nations to aid their economic advancement.
Economic Market Communities * NAFTA (North American Free Trade Agreement): An agreement between the U.S., Canada, and Mexico that eliminated most tariffs and trade barriers. * EU (European Union): A large economic community consisting of many European nations that provides for the free movement of goods, services, and people.
International Entry Modes * Exporting: Selling and shipping raw materials or goods to other nations. * Licensing: A contractual agreement in which one firm permits another to produce and market its product and use its brand name in return for a royalty or other compensation. * Joint Venture (JV): A partnership formed to achieve a specific goal or to operate for a specific period of time in a foreign market. * Strategic Alliance: A partnership formed to create competitive advantage on a worldwide basis. * Wholly Owned Subsidiary (DFI): A firm that is completely owned and controlled by a parent company (Direct Foreign Investment).
CHAPTER 5: Perspectives on the Management Process
Management Fundamentals * Management: The process of coordinating people and other resources to achieve the goals of an organization. * Management Functions (POLC): * Planning: Establishing goals and deciding how to accomplish them. * Organizing: Grouping resources and activities to accomplish some end result in an efficient and effective manner. * Leading: The process of influencing people to work toward a common goal. * Controlling: The process of evaluating and regulating ongoing activities to ensure that goals are achieved.
Management Skills * Interpersonal Skills: The ability to deal effectively with other people, both inside and outside an organization. * Technical Skills: The specific skills needed to accomplish a specialized activity. * Conceptual Skills: The ability to see the "big picture," understand how the various parts of an organization or idea fit together.
Managerial Roles * Informational Roles: Monitor, Disseminator, Spokesperson. * Decisional Roles: Entrepreneur, Disturbance Handler, Resource Allocator, Negotiator. * Interpersonal Roles: Figurehead, Leader, Liaison.
SMART Goals * Criteria for effective goal setting: Specific, Measurable, Achievable, Relevant, Time-bound.
Levels of Management * Top Management: Small group of executives (CEO, President, VP) who guide the fortune of the organization. * Middle Management: Implement the strategies and major policies developed by top management. * First Level Management: Managers who coordinate and supervise the activities of operating employees.
Types of Plans * Strategic Plans: Long-term, high-level plans developed by top management. * Tactical Plans: Smaller-scale plans to implement strategic plans. * Operational Plans: Developed for very short periods of time to implement tactical plans. * Contingency Plans: Back-up plans to be used if primary plans are disrupted.
Leadership Styles * Autocratic Leadership: Task-oriented style; workers told what to do and how to do it with little input. * Democratic Leadership: Leader consults with subordinates before making decisions. * Free-Rein Leadership: Leader provides basic goals and resources, allowing subordinates to determine how to reach goals.
The Managerial Decision-Making Process * Steps: Identifying the problem or opportunity, generating alternatives, selecting the best alternative, and implementing/evaluating the solution.
CHAPTER 6: Designing the Business Organization
Organizational Structure * Organization: Two or more people working together in a structured fashion to achieve a specific set of goals. * Organization Chart: A diagram that represents the positions and relationships within an organization. * Chain of Command: The line of authority that extends from the highest to the lowest levels of the organization.
Job Design * Job Specialization: The separation of all organizational activities into distinct tasks and the assignment of different tasks to different people.
Departmentalization * By Function: Grouping jobs by the same activity. * By Product: Grouping jobs related to the same product or service. * By Geographic: Grouping jobs by territory. * By Customer (Market): Grouping jobs according to the different types of customers. * Matrix Structure: A combination of functional and product departmentalization; report to two managers.
Authority and Control * Delegation: Assigning part of a manager’s work and authority to other workers. * Centralization: The degree to which authority is concentrated at upper levels of the organization. * Decentralization: The degree to which authority is spread throughout lower levels. * Span of Management (Span of Control): The number of workers who report directly to one manager. * Narrow Span: A small number of subordinates; creates a Tall Organization (many levels). * Wide Span: A large number of subordinates; creates a Flat Organization (few levels).
Special Concepts * Intrapreneurship: Encouraging entrepreneurial risk-taking and innovation within a large corporation. * Informal Organization: The pattern of behavior and interaction that stems from personal rather than official relationships. * Advantages: Higher morale, faster communication (grapevine). * Disadvantages: Potential to promote anti-management rumors or goals.
CHAPTER 7: Operations Management Basics
Production and Conversion * Production: The conversion of resources into finished products. * Conversion Process: Transforming inputs (labor, materials) into outputs (goods, services).
Production Planning * Capacity Planning: Determining the amount of product a facility can produce. * Location Planning: Determining where the production facility will be situated. * Layout Planning: The physical arrangement of resources in the production facility. * Process Layout: Similar machines and functions are grouped together. * Product Layout: Arranged according to the sequence of operations for one product. * Fixed-Position Layout: The product remains stationary while people and equipment move to it.
Impact of Technology * Automation: Using machines that can be programmed to do a variety of tasks. * Robotics: The use of programmable machines to perform tasks usually done by humans. * CAD (Computer-Aided Design): Use of computers to aid in the creation, modification, analysis, or optimization of a design. * CAM (Computer-Aided Manufacturing): Use of software to control machine tools and related ones in the manufacturing of workpieces. * CIM (Computer-Integrated Manufacturing): Integrating all aspects of manufacturing through computer systems. * FMS (Flexible Manufacturing System): A system that can be adapted quickly to produce different products.
Operations Control * Purchasing: Obtaining all materials needed for production. * Inventory Control: Managing the amount of supplies, work-in-process, and finished goods. * MRP (Materials Requirement Planning): Computerized system for production scheduling and inventory control. * JIT (Just-in-Time Inventory): A system designed to ensure that materials arrive at a facility just when they are needed. * Work-in-Process (WIP): Partially completed goods. * Finished Goods: Goods ready for sale.
Scheduling Tools * PERT (Program Evaluation and Review Technique): Identifying the sequencing of tasks and the Critical Path (the longest sequence of tasks in terms of time). * Gantt Chart: A graphic scheduling device that shows the amount of time required for each task.
Quality Control * TQM (Total Quality Management): A coordinated effort within an organization to maximize customer satisfaction through continuous improvement. * ISO 9000 & 14000: International standards for quality management and environmental management. * Baldrige Award: A national award for performance excellence. * Supply Chain Management: The management of the entire process that transforms raw materials into final products and delivers them to customers.
CHAPTER 8: Information Technology for Business
Data and Information * Data: Numerical or verbal descriptions that usually result from some sort of measurement. * Information: Data presented in a form that is useful for a specific purpose. * Database: A single collection of data and information stored in one place that can be used by people throughout an organization.
Information Management * IT (Information Technology): The equipment and software that allow for processing and transmitting information. * MIS (Management Information System): A system that provides managers with the information they need to perform their jobs as effectively as possible.
Networks * LAN (Local Area Network): A network connecting computers in a limited geographic area. * Intranet: A private network contained within an organization used for internal communications. * Extranet: A network that allows outsiders (suppliers, vendors) to access certain parts of a firm's intranet.
Information Systems Applications * TPS (Transaction Processing System): For routine, day-to-day record keeping of transactions. * MIS: Provides routine reports for managers. * DSS (Decision Support System): Provides interactive tools for non-routine decision making. * EIS (Executive Information System): Advanced DSS tailored for the strategic needs of top management. * KMS (Knowledge Management System): Systems to capture, organize, and share the collective expertise of the firm's employees. * ES (Expert System): A program that imitates the reasoning of an expert. * Artificial Intelligence (AI): The simulation of human intelligence by computer systems.
E-Business * B2B (Business-to-Business): Sales between companies. * B2C (Business-to-Consumer): Sales from a business to individual consumers. * C2C (Consumer-to-Consumer): Direct sales between consumers (e.g., online auctions).
CHAPTER 9: Managing Human Resources
Human Resource Management (HRM) * HRM: All activities involved in acquiring, maintaining, and developing an organization’s human resources. * HRP (Human Resource Planning): Forecasting future human resource requirements.
Staffing * Job Analysis: Determining the exact nature of a job through systematic study. * Job Description: A list of the tasks and responsibilities of a position. * Job Specification: A list of the qualifications required to perform a particular job. * Recruiting: Attracting a pool of qualified job applicants. * External: Seeking applicants from outside the firm. * Internal: Seeking applicants from among current employees. * Selection: Gathering information about applicants and choosing the best candidate.
Development and Compensation * Training: Improving skills for the current job. * On-the-job Training: Training while the employee is performing the work. * Off-the-job Training: Training away from the workplace. * Orientation: Acquainting new employees with the firm. * Compensation: The payment employees receive in return for their labor. * Benefits: Non-cash compensation (health insurance, pensions).
Performance Appraisal * The evaluation of an employee’s current and past performance relative to standards. * Upward Appraisal: Subordinates evaluate their managers. * 3600 Evaluation: A performance appraisal approach that uses feedback from supervisors, peers, subordinates, and sometimes customers (noted as verbatim "3600").
HRM Legal Environment * Age Discrimination in Employment Act: Prohibits discrimination against workers over . * Americans with Disabilities Act (ADA): Prohibits discrimination against individuals with physical or mental disabilities. * Equal Pay Act: Requires men and women to be paid equally for the same work. * Civil Rights Act: Prohibits discrimination based on race, color, religion, sex, or national origin.
CHAPTER 10: Motivating Employees
Historical Perspectives * Motivation: The internal process that energizes, directs, and sustains behavior. * Hawthorne Studies: Research that showed human relations and social factors are important in the workplace. * Hawthorne Effect: The tendency of workers to work harder when they know they are being studied or that management cares about their welfare.
Motivational Theories * Maslow’s Hierarchy of Needs: A sequence of human needs (Physiological, Safety, Social, Esteem, Self-actualization) that must be met in order. * Herzberg’s Two-Factor Theory: * Hygiene Factors: Job factors that can cause dissatisfaction if missing (pay, working conditions), but do not necessarily motivate. * Motivational Factors: Factors that increase job satisfaction and motivation (achievement, recognition). * Theory X: Assumes employees dislike work and must be coerced to perform. * Theory Y: Assumes employees like work and are self-motivated. * Theory Z: Emphasizes long-term employment, collective decision-making, and individual responsibility (a blend of U.S. and Japanese practices).
Contemporary Views * Equity Theory: People are motivated to maintain perceptions of fairness in comparison to others. * Expectancy Theory: Motivation depends on how much we want something and how likely we think we are to get it. * Goal-Setting Theory: The idea that setting specific, challenging goals can improve performance. * MBO (Management by Objectives): A motivation technique in which managers and subordinates collaborate in setting goals.
Job Design and Schedules * Job Rotation: Systematically moving employees from one job to another. * Job Enlargement: Increasing the number of different tasks in a given job. * Job Enrichment: Increasing the degree of responsibility a worker has over a job. * Empowerment: Giving employees more authority to make decisions. * Flextime: A system in which employees choose their own work hours within certain limits. * Telecommuting: Working at home all the time or for a portion of the work week.
CHAPTER 11: Marketing Products and Services to Customers
Marketing Fundamentals * Marketing: The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers. * Marketing Concept: The philosophy that a firm should provide goods and services that satisfy customers' needs through a coordinated set of activities. * Relationship Marketing: Establishing long-term, mutually satisfying buyer-seller relationships. * CRM (Customer Relationship Management): Using information about customers to create marketing strategies that develop and sustain desirable customer relationships.
Utilities * Form Utility: Created by converting raw materials into finished products. * Place Utility: Created by making a product available at a location where customers wish to purchase it. * Possession Utility: Created by transferring title (ownership) of a product to a buyer. * Time Utility: Created by making a product available when customers wish to purchase it.
Markets * Consumer Markets: Purchasers who intend to consume or benefit from the purchased products personally. * Industrial Markets: Individuals or groups that purchase products for use in their operations or to make other products.
Marketing Strategy * Target Market: A specific group of consumers on which an organization focuses its marketing efforts. * Marketing Mix (4 Ps): Product, Price, Promotion, and Place (Distribution). * Publicity/PR: Communication in news-story form about an organization, its products, or both.
Segmentation Strategies * Undifferentiated Approach: Designing a single marketing mix and directing it at the entire market. * Differentiated Approach: Directing different marketing mixes to different segments of the market. * Concentrated (Focus) Approach: Directing a single marketing mix at a single market segment.
Segmentation Bases * Geographic: Region, city size, climate. * Psychographic: Personality, lifestyle, motives. * Demographic: Age, gender, income, education. * Behavioristic: Volume usage, brand loyalty, end use.
Information and Behavior * Marketing Research: The systematic design, collection, interpretation, and reporting of information to help marketers. * Consumer Buying Behavior Decision-making Process: Problem recognition, information search, evaluation of alternatives, purchase, and post-purchase evaluation. * Branding: Identifying products and distinguishing them from others (Manufacturer brands, Private distributor brands, Generic brands).
CHAPTER 12: Products and Pricing
Classification of Products * Convenience Products: Inexpensive, frequently purchased items with minimal effort. * Shopping Products: Items for which buyers are willing to expend considerable effort in planning and making the purchase. * Specialty Products: Items with unique characteristics that buyers are willing to expend considerable effort to obtain. * Unsought Products: Products that consumers do not necessarily think of buying.
Product Concepts * Product Life Cycle (PLC): The stages a product goes through: Introduction, Growth, Maturity, and Decline. * Product Line: A group of similar products that differ only in relatively minor characteristics. * Product Mix: All the products that a firm offers for sale.
CHAPTER 13: Promotion and Distribution
Distribution Channels * Channels of Distribution: A sequence of marketing organizations that directs a product from the producer to the ultimate user. * Marketing Intermediaries: Middlemen that link producers to other intermediaries or ultimate users. * Wholesalers: Middlemen who take title to goods and sell to retailers or other businesses. * Retailers: Middlemen who sell products directly to consumers.
Promotion Mix * Advertising: Paid non-personal message communicated through mass media. * Personal Selling: Personal communication aimed at informing and persuading customers to buy products. * Sales Promotion: Use of activities or materials as direct inducements to customers (coupons, samples). * Public Relations/Publicity: Communication used to create and maintain favorable relationships with the public.
CHAPTER 14: Managing Accounting Information
Types of Accounting * Managerial Accounting: Providing information for managers inside the organization. * Financial Accounting: Generating financial statements for stockholders, creditors, and government agencies. * Tax Accounting: Planning for tax consequences and preparing tax returns.
GAAP * Generally Accepted Accounting Principles (GAAP): The set of accepted rules and practices for financial reporting.
The Accounting Equation * The fundamental logic of the balance sheet: .
The Balance Sheet Components * Assets: Resources owned by a business. * Current Assets: Cash and other assets that can be converted into cash within one year. * Fixed Assets: Assets that will be held or used for a period longer than one year (e.g., land, equipment). * Intangible Assets: Assets that do not have physical substance (e.g., patents, trademarks). * Liabilities: Debts or obligations of a business. * Current Liabilities: Debts to be paid within one year. * Long-term Liabilities: Debts to be paid over a period longer than one year. * Owners’ Equity: The interest of the owners in the assets of the company. * Retained Earnings: The portion of a corporation’s profits not distributed to stockholders.
Financial Statements * Balance Sheet (BS): A summary of a firm’s assets, liabilities, and owners’ equity at a specific point in time. * Income Statement (IS): A summary of a firm’s revenues and expenses during a specified accounting period. * Cash Flow Statement (CFS): A summary of the money coming into and going out of a firm.
Financial Ratios * Profitability Ratios: Measure the ability to earn income. * Short-term (Liquidity) Ratios: Measure the ability to pay back short-term debts. * Activity Ratios: Measure how effectively a firm is using its assets. * Leverage (Debt-to-equity Ratio): Measures the extent to which a firm relies on debt financing relative to equity.
CHAPTER 15: Managing Business Finances
Financial Management * Finance: The function of business that involves acquiring and managing money. * Financial Management: All activities concerned with obtaining money and using it effectively.
Short-Term Debt Financing * Trade Credit: Credit extended by a supplier to a buyer for goods or services. * Promissory Notes: A written pledge by a borrower to pay a certain sum of money to a creditor at a specified future date. * Commercial Paper: Short-term promissory notes issued by large corporations.
Equity Financing * Stocks: Shares of ownership in a corporation. * IPO (Initial Public Offering): The first time a corporation sells stock to the general public. * Retained Earnings: Profits kept in the company to finance growth.
Long-Term Debt Financing * Bond: A corporation’s written pledge to repay a specified amount of money with interest. * Indenture: A legal document that details all the conditions relating to a bond issue. * Debentures: Bonds backed only by the reputation of the issuing corporation (unsecured).
Capital Structure * Capital Structure: The mix of debt and equity financing used by a firm. It involves deciding between Equity (selling ownership) and Debt Financing (borrowing money).