Which business form is best suited to raising large amounts of capital?

Which form of business can raise capital the fastest?

Partnership – Advantages: Partnerships allow for shared decision-making and management responsibilities. It is easier to raise capital than in a sole proprietorship.

Which form of business organization faces the greatest agency problems?

The answer is D) Corporation . The more removed the owner is from the manager, the higher the agency problems .

Why is it easier for a corporation to raise large amounts of capital than it is for a partnership?

Stock of a corporation is easier to transfer to a potential buyer than is an interest in a proprietorship or partnership , and because more investors are willing to invest in stocks than in partnerships (with their potential unlimited liability), a corporate investment is relatively liquid.

Which of the following individuals have unlimited liability for a firms debts based on their ownership interest?

A business owned by a solitary individual who has unlimited liability for the firm’s debt is called a: sole proprietorship.

What type of business is best for Juanita to start?

A corporation, because she needs a large investment to get started a sole proprietorship , because she will work alone from home a franchise, because many others will want to start the same business a cooperative, so that she and other translators can work together.

Which business type would have the hardest time obtaining capital?

If your business hits hard times , you are personally responsible for any debts and you could lose your personal assets. It’s also much harder to get financing or raise capital as a sole proprietor—banks and investors see it as a riskier endeavour, so if you plan to grow, this might not be the route for you.

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Who has ultimate control of a corporation?

Since Shareholders elect the Directors and Directors elect the officers, it is apparent that Shareholders hold the ultimate position of authority in a company.

Which of the following is a cash flow from a corporation into the financial markets?

Specifically, payment of loan interest, dividends or retirement of a long term debt is a cash outflow from a corporation to the financial market , where a firm transact with the individuals, other corporation and businesses as well as the government to raise capital .

Which one of the following actions by financial manager is most apt to create an agency problem?

Which one of the following actions by a financial manager is most apt to create an agency problem ? Increasing current profits when doing so lowers the value of the firm’s equity. Any person or entity other than a stockholder or creditor who potentially has a claim on the cash flows of a firm.

How can corporations raise large amounts of capital?

Firms can raise the financial capital they need to pay for such projects in four main ways: (1) from early-stage investors; (2) by reinvesting profits; (3) by borrowing through banks or bonds; and (4) by selling stock. When owners of a business choose sources of financial capital , they also choose how to pay for them.

Why is it easier for a corporation to raise capital?

If a company is in good financial health, it can raise capital by issuing common stock. This does not raise any capital for the corporation , but it makes it easier for stockholders to sell shares on the open market.

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What are the three major legal forms of business organization?

The three major forms of business in the United States are sole proprietorships , partnerships , and corporations .

Which of the following has unlimited liability for debts of business?

Sole proprietorship. A business formed by two or more individuals who each have unlimited liability for all of the firm’s business debts is called a: Sole proprietorship.

Which of the following have unlimited liability for a company’s debts?

The reason business owners of sole proprietorships and partnerships are subject to unlimited liability is because both business structures do not create a separate legal entity. The owners and the business are one entity.

Why should financial managers strive to maximize?

Why should financial managers strive to maximize the current value per share of the existing stock? Doing so guarantees the company will grow in size at the maximum possible rate. Because this will increase the current dividends per share. Because managers often receive shares of stock as part of their compensation.