Things to Know About Company Operation

 Things to know about company operation

1.      What are LLCs (limited liability companies)?

 

Companies are governed by a board of directors appointed by shareholders. Unlike a sole partnership, these businesses have a separate existence separate from the owner by law. Therefore, the assets and liabilities of the business are limited to the business itself.

 

 

2.      Explain the concept of “limited liability” 

 

This means that the business is limited in liability. It further explains that the business is referred to as a separate person from the business owner. Because of this, the debts of the business are limited to the business itself and in the event of a business bankruptcy, the business owners are not obliged to pay it from their assets.

 

 

3.      What is the working capital of a business?

Working capital refers to the basic amount required to run a business. This is identified by subtracting current assets from current liabilities. Negative working capital for a business means that they do not have enough money to cover the day-to-day expenses of the business. Another name for working capital is a net current asset. A working capital cycle is a process from receiving goods from suppliers (accounts payable) to selling to customers (account receivable). Payments to suppliers are made here from the money received from customers.

 

 

4.      What are public limited companies?

 

A public limited company is a company registered in a stock exchange. As you know, a small amount of capital is enough to start a business. But as the business expands, they need more capital. As a solution to this, private limited companies are registered in the stock market and issue shares to the public. After this, the business is called a public limited company. One of the main features is that the company is obliged to inform the shareholders of its business about some of the financial affairs and internal transactions that have not been disclosed so far. Business financial information is issued separately in 10k and 10q. (10K releases an audited financial statement calculated annually. 10Q reports release unaudited financial statements quarterly three times a year. Also, corporate disclosure discloses the internal transactions of the business to the public.

 

 

5.      What is a dividend that public limited companies issue?

 

A dividend refers to the distribution of a portion of the profit earned by the business to the shareholders of the business. This is decided by the board of directors of the business. The percentage determines how much of the profit earned by the business is invested in future growth and what part is given to the shareholders. Matured companies usually give dividends up to 60% of their profits. Young growth companies (companies that grows revenue growth at around 20-25% a year) often don't pay dividends. Dividends cannot be expected from such companies. This is because the main objective of the business is to expand the business in its infancy. When you consider it as a company, the thing that must be remembered is that the dividend should be given only if the shareholders are entitled to a similar benefit rather than a replacement of that amount. Also, as an investor, you should pay attention to the fact that the business should give dividends only from profits. Not by selling their assets.