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Chapter 5 Vocabulary
including italicized words.
56
Business
9th Grade
11/13/2011

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Term
Sole Proprietorship
Definition
Business owned by a single individual.
Term
Unlimited Liability
Definition
Legal condition under which any damages or debts attributable to the business can also be attached to the owner because the two have no separate legal existence.
Term
Partnership
Definition
Unincorporated business owned and operated by two or more people under a voluntary legal association.
Term
General Partnership
Definition
Partnership in which all partners have the right to participate as co-owners and are individually liable for the business's debt.
Term
Limited Partnership
Definition
Partnership composed of one or more general partners and one or more partners whose liability is usually limited to the amount of their capital investment.
Term
General Partners
Definition
People who run the business in a Limited Partnership.
Term
Limited Partners
Definition
The owners that don't work in a Limited Partnership.
Term
Corporation
Definition
Legally chartered enterprise having most of the legal rights of a person, including the right to conduct business, to own and sell property, to borrow money, and to sue or be sued.
Term
Shareholders
Definition
Owners of a corporation.
Term
Stock Certificate
Definition
Document that proves stock ownership.
Term
Common Stock
Definition
Shares whose owners have voting rights and have the last claim on distributed profits and assets.
Term
Dividends
Definition
Distributions of corporate assets to shareholders in the form of cash or other assets.
Term
Preferred Stock
Definition
Shares that give their owners first claim on a company's dividends and assets after paying all debts.
Term
Private Corporation
Definition
Company owned by private individuals or companies
Term
Public Corporation
Definition
Corporation that actively sells stock on the open market.
Term
Liquidity
Definition
The level of ease with which an asset can be converted to cash.
Term
S Corporation
Definition
Corporation with no more than 75 shareholders that may be taxed as a partnership; also known as a sub chapter S corporation
Term
Limited Liability Companies (LLC's)
Definition
Organizations that combine the benefits of S corporations and limited partnerships with out the drawbacks of either.
Term
Subsidiary Corporations
Definition
Corporations whose stock is owned entirely or almost entirely by another corporation.
Term
Parent Company
Definition
Company that owns most, if not all, of another company's stock and that takes an active part in managing that other company.
Term
Corporate Governance
Definition
In a broad sense, describes the policies, procedures, relationships, and systems in place to oversee the successful and legal operation of the enterprise; in a narrow sense, describes the responsibilities and performance of the board of directors.
Term
Chief Executive Officer (CEO)
Definition
Person appointed by a corporation's board of directors to carry out the board's policies and supervise the activities of the corporation.
Term
Proxy
Definition
Document authorizing another person to vote on behalf of a shareholder in a corporation.
Term
Board of Directors
Definition
Group of people, elected by the shareholders, who have the ultimate authority in guiding the affairs of a corporation.
Term
Merger
Definition
Combination of two companies in which one company purchases the other and assumes control of its property and liabilities.
Term
Consolidation
Definition
Combination of two or more companies in which the old companies cease to exist and a new enterprise is created.
Term
Acquisition
Definition
Form of business combination in which one company buys another company's voting stock.
Term
Hostile Takeovers
Definition
Situations in which and outside party buys enough stock in a corporation to take control against the wishes of the board of directors and corporate officers.
Term
Leveraged Buyout (LBO)
Definition
Situation in which individuals or groups of investors purchase companies primarily with debt secured by the company's assets.
Term
Limited Liability Partnership (LLP)
Definition
All partners in the business are limited partners and have only limited liability for the debts and obligations of the partnership.
Term
Partnership Agreements
Definition
A written document that states all the terms of operating the partnership by spelling out the partners' rights and responsibilities.
Term
Stock Dividends
Definition
Dividends paid in cash or stock.
Term
Cumulative Preferred Stock
Definition
Any unpaid dividends must be paid before dividends are paid to common shareholders.
Term
Closed Corporations/ Closely Held Companies
Definition
Private Companies
Term
Professional Corporations
Definition
Doctors, Lawyers and some other professionals other join forces in a special type of private corporation.
Term
Share
Definition
A piece of the company.
Term
Publicly Held/Publicly Traded
Definition
Held by and available for sale to the general public.
Term
Holding Company
Definition
A special type of parent company that owns other companies for investment reasons and usually exercises little operating control over those subsidiaries.
Term
Alien Corporation
Definition
Operates in the United States but is incorporated in another country.
Term
Foreign Corporation/Out of State Corporation
Definition
Incorporated in one state but does business in several other states.
Term
Domestic Corporation
Definition
Business only in the state where it is chartered.
Term
Institutional Investors
Definition
Ex: Pension Funds, Insurance Companies, Mutual Funds, and College Endowment Funds.
Term
Vertical Merger
Definition
Occurs when a company purchases a complementary company at a different level in the "value chain."
Term
Horizontal Merger
Definition
Involves two Similar Companies at the same level.
Term
Conglomerate Merger
Definition
Two firms offer dissimilar products or services, ofter in widely different industries.
Term
Market Extension Merger
Definition
Combines firms that offer similar products and services in different geographic markets.
Term
Product Extension Merger
Definition
Round out a product line.
Term
Economies of Scale/Efficiencies/Synergies
Definition
Benefits of working together will be greater than if each company continued to operate independently.
Term
Culture
Definition
The way people in a given organization approach the day-today business of running a company.
Term
Culture Clash
Definition
Two joining companies have different beliefs about what is really important, how to make decisions, how to supervise people, how to communicate, etc.
Term
Industry Consolidation
Definition
The stronger players that frequently acquire smaller, weaker players, reducing the number of suppliers left in the market.
Term
Strategic Alliance
Definition
A Long term partnership between companies to jointly develop, produce, of sell products.
Term
Joint Venture
Definition
A separate legal entity established by the strategic partners.
Term
Raider
Definition
Buyer
Term
Tender Offer
Definition
Offers to buy a certain number of shares of stock in a corporation at a specific price.
Term
Proxy fight
Definition
The raider launches a public relations battle for shareholder votes, hoping to enlist enough votes to oust the board and management.
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