Summary Fundamentals of corporate finance by Berk & Demarzo (2nd global edition)


Chapter A – Introduction

Introduction

Finance is about financial decisions; this book focuses on how people in corporations make financial decisions. The financial decisions, in your personal life and inside a business, are tied together in the Valuation Principle. This principle shows how to make the costs and benefits of a decision comparable so that we can weigh them properly.

The four types of firms

There are four major types of firms that financial managers run:

1. Sole proprietorships
A sole proprietorship is a business owned and run by one person. This type of firm is usually very small with few of none employees and is the most common type in the world.
Key features:

  1. Easy to set up;

  2. No separation between the firm and the owner (one owner who runs the business);

  3. Owner has got unlimited personal liability for any of the firm’s debts;

  4. Life of the firm is limited to the life of the owner.

2. Partnerships
A business owned and run by more than one owner is called a partnership.
Key features:

  1. All partners are liable for the firm’s debt;

  2. Death or withdrawal of any single partner means the end of the partnership;

  3. If the partnership agreement provides for alternatives (e.g. buyout) partners can avoid liquidation.

When the partnership has got two kinds of owners, general partners and limited partners, the partnership is called a limited partnership. The general partners have the same rights and privileges as partners in any general partnership (personal liability). The liability of limited partners is limited to their investment, they have limited

... Interested? Read the instructions below in order to read the full content of this page.

Toegangsopties


De volledige inhoud van deze pagina is alleen zichtbaar voor ingelogde gebruikers van World Supporter.

Meer voordelen van je eigen magazine account:

  • Je kunt je eigen inhoud aanmaken
  • je kunt de navigatie gebruiken om je favoriete organisaties, groepen en supporters te volgen
  • Je kunt bijdragen toevoegen aan de inhoud van andere World Supporters
  • Je kunt je favoriete inhoud 'flaggen' en later gebruiken
  • Meer voordelen die kun je vinden via het menu en de WorldSupporter toolkits

Wil je volledige toegang tot alle pagina's op World Supporter?

 

Support JoHo and support yourself by becoming a JoHo member

Word JoHo donateur

 

 

Contributions

Add new contribution

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
Image CAPTCHA
Enter the characters shown in the image.
Summaries & Study Note of Business and Economics World Supporter
Join World Supporter
Join World Supporter
Log in or create your free account

Waarom een account aanmaken?

  • Je WorldSupporter account geeft je toegang tot alle functionaliteiten van het platform
  • Zodra je bent ingelogd kun je onder andere:
    • pagina's aan je lijst met favorieten toevoegen
    • feedback achterlaten
    • deelnemen aan discussies
    • zelf bijdragen delen via de 11 WorldSupporter tools
Content
Access level of this page
  • Public
  • WorldSupporters only
  • JoHo members
  • Private
Statistics
52
Selected Categories
Categories