Business, Chap 6

  1. Aquisition
    When one company completely buys out another company.
  2. Board of Directors
    • Separation of ownership and management.
    • Sets policy
    • Makes major business and financing decisions
    • Authorizes stock issuance
    • Elects management team
  3. Sarbanes-Oxley Act of 2002
    • Federal Law
    • states;  Board of Directors cannot ignore their responsibilities of managing the internal controls of a company without incurring risk of long prison sentences and huge fines.
  4. CEO  (chief executive officer)
    • Reports to Board of Directors
    • Responsible for entire operations of a corporation
  5. CFO    (chief financial officer)
    • Reports to CEO
    • Responsible for ;  Analyzing/Reviewing financial data
    •                                Reporting financial performance
    •                               Preparing budgets
    •                                Monitoring expenditures and costs.
  6. COO    (chief operating officer)
    • Reports to CEO
    • Responsible for day-to-day operations
  7. Corporation
    • Business structured as a 'separate legal entity'
    • Files separate tax returns
    • Formed under state laws
    • Protects the owners personal assests
    • Can sue and be sued
    • Requires much ongoing paperwork
  8. C corporation
    as a separate legal entity, it is taxed at the entity level
  9. S corporation
    • Taxed at the shareholder level
    • Profit/Loss based on proportional interest of ea shareholder
    • Shareholders must be U.S residents
    • Can have no more than 100 Shareholders
    • Can only have one class of stock
  10. Corporate Structure
    • Shareholders
    • Board of directors
    • Corporate Officers
  11. The 7 Steps of Forming a Corporation
    • 1. Chose a Name
    • 2. Appoint Directors
    • 3.  File Articles of Incorporation
    • 4.  Draft Bylaws
    • 5.  Hold a Meeting of the Board
    • 6.  Issue Stock
    • 7.  Obtain Licenses and Permits
  12. Limited Partnership
    • Limited Liability
    • Unlimited members
    • Must dissolve when any member leaves, imposed by
    •           state of formation.
    • Distribution of profits determined by owner
  13. Synergy
    Effect achieved when two companies combine.
  14. Synergistic Value
    Created when the new company, as a result of a merger or aquisition, can realize operation or financial economies of scale.
Card Set
Business, Chap 6