Sole Proprietorship Partnership Corporation Finance Essay - Free Essay Example

Sample details Pages: 4 Words: 1289 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Provides vision for identification and selection of proper corporate strategies and business projects that add value to their concerns. Forecasting the fund requirements of Concerns and devise strategies for acquiring those funds. The various forms of organisation are- Sole Proprietorship Partnership Corporation Following are the advantages/ disadvantages of forms of organisation- Forms of Organisation Advantages Disadvantages Sole Propreitorship Easy formation Few liberal government regulations No corporate income taxes and other tax liabilities are also low. Amount of investment is low. No transfer of ownership Liability of Proprietor is unlimited. Life of Proprietorship concern is limited to the life of proprietor. Partnership Easy formation Involves low cost Good amount of Capital Unlimited liability Limited life of the organization, Difficulty of transferring ownership Difficulty of raising large amounts of capital. Â Corporation Corporate have unlimited life Easy to transfer ownership interest Limited liability of members. Corporate earnings may be subject to double taxation Formation is complex and involves large documentations. Corporations go public, by evaluating their assets and potential and presenting the potential to the public for sale. The Corporation sets a day for the initial public offering. An agency problem oc curs when the managers of the firm act for their personal interests and not in the interests of the shareholders and company. Corporate governance is the set of policies, customs, laws rules that control and provide guidelines about companys behaviour towards its directors, shareholders stakeholders. Managers primary goal is stockholder wealth maximization, which translates the price of the firms common stock. Firms have social responsibility to provide a safe working environment, to avoid air or water pollution and produce safe products. The most significant cost-increasing actions will have to be put on a mandatory basis rather than a voluntary basis to ensure that the burden falls uniformly on all businesses. Stock prices maximisation is good for society. It requires efficient, low-cost operations that produce high-quality goods and services at the lowest possible cost. Stock price maximization requires the development of products and services according to consumers need, so the profit motive of concern leads to new technology, to new products, and to new jobs in society. Yes, firms should behave ethically. According to the recent study, it indicate that the executives of most major firms in the United States believe that firms do try to maintain high ethical standards in all of their business dealings. Further, most executives believe that there is a positive correlation between ethics and long-run profitability. Its true, conflicts often arise between profits and ethics but Companies must deal with these conflicts on a regular basis, and a failure to handle the situation properly can lead to huge product liability suits and even to bankruptcy. There is no place for unethical behaviour in the corporate world. Following are the 3 aspects affecting the value of investment- Amount of expected cash flows; Timing of the cash flow stream; and Risk of the cash flows. Free cash flows are the cash flows available for distribution to all investors (stockholders and creditors) after setting off all expenses (including taxes) and after retaining investments to support growth. A calculation of a firms cost of capital in which each category of capital is proportionately weighted. All capital sources including common stock, preferred stock, bonds and any other long-term debt are included in a WACC calculation. Other thing being equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and a higher risk. A firms value is the sum of all future expected free cash flows, converted into todays dollars. Households are net savers of capital. Non-financial corporations, Governments are net borrowers. Non-financial corporations (i.e., financial intermediaries) are slightly net borrowers, but they are almost breakeven. Capital is transferred through: direct transfer (e.g., corporation issues commercial paper to insurance company); an investment banking house (e.g., IPO, seasoned equity offering, or debt placement); a financial intermediary (e.g., individual deposits money in bank, bank makes commercial loan to a company) The interest is the price paid by the borrower for borrowed capital. Return on equity capital comes in the form of dividends and capital gains. The four fundamental factors that affect cost of money are as follows- Production opportunities- It refers to the returns gained from investment in productive assets: the more productive a firm believes its assets will be, the more it will be willing to invest the capital necessary to acquire those assets. Time preference for consumption- It refers to consumers needs for current consumption versus savings for future consumption. Inflation It refers to the tendency of prices to rise. The higher the expected rate of inflation, the larger the required rate of return. Risk -It refers in a money and capital market context. It is the chance that a loan will not be repaid as promised. The higher the perceived default risk, the higher the required rate of return. The cost of money will be influenced by the economic conditions as policy, fiscal deficits, business activity, and foreign trade deficits. The cost of money in case of international investment is also affected by country risk. It refers to the risk that arises from investing or doing business in a particular country This risk depends on the countries economic, political, and social environment. The cost of money for an international investment is also affected by exchange rate risk. When investment is made in overseas the security usually will be denominated in a currency other than the dollar, which means that the value of the investment will depend on exchange rates changes. Changes in relative inflation or interest rates will lead to changes in exchange rates Also, an increase in country risk will also cause the countrys currency t o fall. Financial security is a type of financial instrument that is negotiable and having recognised financial worth. Financial Security will have the potential growth to generate some additional return above its face value. Financial Instruments are basically classified under two forms- Debt Security- It includes bonds, debenture and banknotes Equity Security- It includes common stocks, preferred stock and other stocks. Some Financial institutions are as follows- Mutual Funds LIC Credit unions Pension Funds Different types of markets are as follows- Physical/ non physical markets Money/ Capital market Primary /Secondary market Secondary markets are organised by Location like physical location, computer and telephone network locations. According to these locations, buyers and sellers orders are matched. Physical location exchanges include the NYSE, AMEX and Tokyo stock exchange. Computer/telephone networks includes Nasdaq, government bon d markets, and foreign exchange markets. The NYSE and AMEX are the two largest auction markets (NYSE is a modified auction, with a specialist). In these auction market participants have a seat (or trading rights) on the exchange,they meet face-to-face, and place orders for themselves or for their clients; e.g., CBOT Some orders are called market orders, which are executed at the current market price, some are limit orders, which specify that the trade should be done only at a certain price within a certain time period . In dealer markets, dealers keep an inventory of the stock and place bid and ask for the advertisements, which are prices at which they are willing to buy and sell in market. A computerized quotation system keeps track of bid and ask prices, but does not automatically match buyers and sellers. Some examples of dealer markets are the Nasdaq national market, the Nasdaq small cap market, the London SEAQ ECNS are computerized systems that match orders from buyers an d sellers and automatically execute the trades. Some examples are Instinet (US, stocks, owned by Nasdaq); Archipelago (US, stocks, owned by NYSE). Don’t waste time! Our writers will create an original "Sole Proprietorship Partnership Corporation Finance Essay" essay for you Create order

The Four Horsemen - 1414 Words

4 HorseMen Prologue On December 17th 1985 it began. Heaven erupted with a fury like no other. Its gates opened up and a horn blast rang out, with this a white horse appeared. The rider carried with him a crown and a bow. His goal was to spread a war of conquest across his given portion of the Earth. After a short amount of time yet another horn blast rang throughout the earth. A second horse, this one fiery red, appeared through the gate. The rider carried with him a sword held upright as if ready to go to war. He too set off to his given portion of the earth to spread a war among all those who inhabit that land. Shortly thereafter another horn blast cried out. This time a black horse appeared, the rider carried with him a scale. He too had a set goal, his was to spread a great famine like none the earth had seen across his portion of the land, killing all in it. He set off to his allotted section and began his work. Lastly, another horn blasted out. This time the horse was a dilapidated sickly green horse. The rider appeared in a black cloak with a large cowl so that his entire face was hidden. He carried with him a large scythe. He was to spread death to every being who crossed his path in his allotted section of the earth. The White horse held a domain upon the area known as North America. A great war between Canada and the United States broke out. All of South America turned into complete war with no form of government. Within a week the death tollShow MoreRelatedNow You See Me Movie Essay1379 Words   |  6 Pageslot of significant characters. The magicians, known as the Four Horsemen, are our big tricksters in this situation. The first is Daniel Atlas; he is a world renowned magician, who has few nervous qualities about him. 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Sources of Power in Leadership Free Essays

The chairman of Shell Australia, Russell Caplan, has had many careers since graduating from Melbourne University in 1968—but all in one company. Most recently, Caplan led the restructuring of the company’s oil and chemical distribution and marketing into a global business from late 2004. Shell Australia’s profit before interest and tax increased almost 70 per cent, to $1. We will write a custom essay sample on Sources of Power in Leadership or any similar topic only for you Order Now 23 billion, in 2005 after reforms at Victoria’s Geelong and Sydney’s Clyde refineries added to oil and gas production profits. But Caplan is facing a considerable test in helping Shell’s Gorgon gas joint-venture partners gain final approval from the West Australian Government for the project, after concerns were raised by the WA Environmental Protection Agency. Here is what he says: ‘In all of my time with Shell, the one constant is change. I say to my people, â€Å"You had better get used to it because that’s the way we work. † The contribution I can make is to express things as simply and clearly as I can. People react positively if they are shown a clear way forward—it doesn’t have to be a new or profoundly brilliant way; it just has to be clear. I find people have difficulty with priority setting, so giving them some guidance makes it legitimate to focus on ome things more than others. ‘When it comes to the challenges of depletion of natural resources and reducing emissions facing the oil industry, the first thing is to recognise sustainable development as a fundamental part of our philosophy. Triple-bottom-line reporting is real for us, not just talk. We would not be involved with the Gorg on project unless we could meet the social and environmental consequences too. I have personal targets associated with my remuneration. Triple-bottom-line reporting is embedded in our company, and that sometimes makes me a little sharp with some people who wish to take he view that we are big industry and therefore we couldn’t recognise those issues. ‘I have been continually surprised and pleased by the opportunities that I have had at Shell, and many were not of my choosing. If I said, when I joined in 1968, â€Å"I could have planned this,† that would be fatuous. I think that you should have two principles. The first is do the best you can. It annoys me when people focus on what they are going to do next rather than what they are doing now. I am very attracted to someone who delivers a little more than they say they are going to deliver, a little faster and is very etermined to succeed at what they are currently doing. That is the greatest indicator of what the y can do. You also need a sense of good and bad. If you want to be in a legitimate business, Shell is a good place to be. There is a lot of good in Shell †¦ it’s not perfect, but there’s a lot of good and it gives you opportunities. ‘In terms of my leadership style, I can think of a number of influences. I learned the importance of pushing yourself and doing the best you can do. I learnt from former Shell executive and Rio Tinto chairman Paul Skinner the benefit of clarity, consistency and moderation. I have also learnt something remarkable from my wife; that is, the ability to stick to core values and express them simply. ‘Finally, I am conscious of the fact that I have come back to Australia after ten years away, and it is critically important to my effectiveness as a leader to reconnect with the Australian community, because my role as a leader is to bridge outside and inside. You get very remote if you are living away and following Australia by Internet, as opposed to smelling the dust—and seeing the pain of St Kilda losing. ’ Russell Caplan Position: Chairman Organisation: Shell Australia Staff: 3200 Direct reports: Four Time in position: Four months Time in company: 39 years Activities for discussion, analysis and further discussion 1 Would you consider Russell Caplan to be an effective leader? Why? What characteristics of effective leadership do you identify in him from the case material above? 2 What characteristics does he appear to value in subordinates who he believes will be promotable? 3 Would you be prepared to work for this manager? Why? Source: Adapted from Tandukar, A. 2006, The good oil, Business Review Weekly, John Fairfax Holdings Limited, 22 June, p. 44. How to cite Sources of Power in Leadership, Papers