The beginning of chapter of Intermediate financial management book was the review of financial concepts and introduction to the course. Chapter One discusses the stages in the corporate life cycle. It discusses the characteristics, as well as, the advantages and disadvantages. It also talks about the primary goal of financial management, ways to maximize intrinsic value, and the cost of money.
There are three main stages in the corporate life cycle the. The three most important form of business organization are proprietorship, partnership, and corporation. Proprietorship is a business owned by one individual. Many companies start out as a proprietorship. Sole proprietorship is usually used for small business. The advantages of proprietorships
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A partnership is created when two or more individual or entities come together to conduct an unincorporated business for profit. Partnership agreements define how profits and losses are shared between partners. Proprietorship and partnership both share similar advantages and disadvantages. Partners can lose their personal assets even those not involved with the business. Limited partnership is when certain partners are designated general partners and other limited partners. In limited partnership the limited partners can lose only the amount of their investment in the partnership, while general partners have unlimited liability. Limited partners usually have zero control. Examples of limited partnerships are real estates and oil companies. At least one partner is liable for the debt of the partnership in both limited and regular partnerships. Some companies that anticipate growth begin as a corporation. A corporation is a legal entity created under state laws, and it is able to carry on even if the owners are deceased. Limited liability losses are limited to the actual funds invested. Corporate forms offer more advantages that proprietorship and partnerships, but does have two disadvantages: corporat4e earning could be