introduction to management—ch02讲义教材.ppt

Forms of Business Ownership;A proprietorship is owned by one individual. ;A partnership is owned by two or more individuals. ;Some limited partners Partners’ liability limited to cash or property they contributed to the partnership They are only investors, not participate in management Share profits or losses ;One or more general partners Manage business Receive a salary Share the profits or losses Have unlimited liability ;Seventy-five or fewer Earnings distributed to the owners Taxed at personal income tax rate of each owner Limited liability;A type of general partnership General partnership Limited liability;A corporation is organized under state or federal statutes as a separate legal entity.;Dividends Increase on the value of the stock;;Assume ownership of a family business Purchase an existing business Franchising --- use trademark, trade name, copyright under specified conditions;Franchise Advantage disadvantages ;Return on investment ROE = earnings after tax/equity Risk ;Higher risk expects higher return The return to creditors is the interest rate To compensate for the higher risk, creditors charge a higher rate;Less managerial expertise No funds to diversify into other businesses Death or retirement of owners Higher risk than large corporation Higher interest rates charged by creditors Cost of financing is higher