A study on concepts of finance for finance decision making

May 28th, 2015
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Abilene Christian University
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This is because even a small amount of debt increases the risk of bankruptcy and also because any obligation to pay interest represents funds that cannot be used for running and growing the business. In other words, debt reduces the flexibility of management which makes owning

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Basic ConceptsWhat is Business?Different forms of Business.(Sole proprietorship, partnership,Company, private limited company,public limited company)A business is a legally recognized organization designed toprovide goods and/or services to consumers. A business istypically formed to earn profit that will increase the wealth of itsowners and grow the business itself. The owners and operatorsof a business have as one of their main objectives the receipt orgeneration of a financial return in exchange for work andacceptanceof risk.Businesses can also be formed not-for-profit or be state-owned."Business" relates to the state of being busy doing commerciallyviableandprofitablework.Sole proprietorship :A sole proprietorship is a business in which an individual is solelyliable for its obligations of the business, is entitled to all of itsprofits and exercises complete managerial control. A soleproprietorship is the simplest and most common form ofbusiness.Features:Unlimited personal liability obligations of the businessA sole proprietor has complete control and decision-makingpower over the businessPartnership:Partnership or firm as it is often called is the 2nd stage in theevolution of forms of business organization. Partnership as aform of business organization grew out of the limitations ofindividual proprietorship. In sole proprietorship, the financialresources, managerial skill, risk bearing capacity were limited.When business acti

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