1. Financial Concepts

2. Lesson Objectives
Identify and describe all parts of the business life cycle
Describe the concept of capital and discuss how businesses raise capital and why they need it
Compare and contrast different forms of business ownership

3. Key Vocabulary Terms Bond Business Life Cycle Buyout Capital
Cessation of operation
Corporation
Debt
Entrepreneur
Fixed income security
Intangible
Intellectual Property
Interest
Liability
Limited Liability Company
Liquidation

4. Key Vocabulary Marketplace Market share Partnership Principal
Prototype
Sole Proprietorship
Stock
Strategy
Tangible
Valuation
Venture Capital Firm

5. Introduction to ECPak
You are in a very special position. As advanced finance students, you have been asked for help by Eduardo Cisneros, entrepreneur of ECPak Company. In fact, he has written a memo to you explaining the specifics of his request.

6. Introduction to ECPak Download- Reading: Memo from Eduardo Cisneros
What kinds of things do you think you need to know in order to help out Eduardo and his company?
Write your answers on the board after you collaborate with your group.

7. Business Life Cycle

8. Your life cycle
Where would you place yourself on the diagram? Where were you when you were born? Where are your grandparents?

9. Business life Cycle
Predict what happens to business in each part of the cycle.
Name one company that you think is in each part of the cycle.

10. Business Life Cycle
Start-up
Growth
Maturity
Decline
Cessation

11. Business Life Cycle Download- Reading: Business Life Cycle
Correct any incorrect predictions about the Business Life Cycle

12. Business Life Cycle of ECPak
Download- Reading: ECPak
Label each section of the article with the stage of the business cycle it describes
Be able to defend your predictions with facts and conclusions from the reading

13. Business Life Cycle What is the name of one company that you admire?
Predict what stage the company is at in the business life cycle.
Give one reason to support your prediction.

14. Lesson Objectives
Identify and describe all parts of the business life cycle
Describe the concept of capital and discuss how businesses raise capital and why they need it
Compare and contrast different forms of business ownership

15. Introduction to Capital
Define- Capital (in finance terms)
Download- Anticipation Guide: An Introduction to Capital
Download- Reading: An Introduction to Capital
While reading please complete the anticipation guide

16. Lesson Objectives
Identify and describe all parts of the business life cycle
Describe the concept of capital and discuss how businesses raise capital and why they need it
Compare and contrast different forms of business ownership

17. Forms of Business Ownership
Sole proprietorship
Partnership
Corporation
Limited liability company
List defining characteristics of each in a table for reference
Download- Note-Taking Guide: Legal Forms of Business Ownership

18. Unit 1, Lesson 2 Legal Forms of Business Ownership
AOF Applied Finance
Unit 1, Lesson 2 Legal Forms of Business Ownership
Copyright © 2007–2012 National Academy Foundation. All rights reserved.

19. Sole proprietorship: Going it alone
Characteristics:
Typical size: very small
A single individual owns and operates the business
The sole proprietor is the owner of a sole proprietorship
The sole proprietorship can hire employees, but the owner cannot be an employee
Typical examples are small shopkeepers, artists, craftspeople, carpenters, consultants, and writers
A potter is likely to be a sole proprietor.

20. Sole proprietorship advantages and disadvantages
The owner is personally responsible for all actions of the business
The owner is personally liable for all business debts
Advantages:
Simple and inexpensive to create and operate
Least regulated of all business forms
All profits are reported on the owner’s personal income tax return

21. General partnership: Sharing the responsibility
Characteristics:
Typical size: from two individuals to a large firm with many partners
The partners run the business but may not be employees of it
There is slightly more regulation than for a sole proprietorship
The owners sign a written partnership agreement about how to run the business
What options might someone have if he no longer wanted to work with his partners?

22. General partnership advantages and disadvantages
Simple and inexpensive to create and operate
All profits are taxed as personal income to the partners
Disadvantages:
All partners are responsible for any actions taken in the name of the business by all other partners
All business debts are the personal responsibility of the partners
Would you become business partners with a friend?
What qualities would you want your partner to have?

23. Corporation: Putting up a wall
Characteristics:
Typical size: ranges from one or two stockholders to millions of them
The corporation can hire employees, which may include the owners
In the eyes of the law, a corporation is treated like an individual:
It can own property
It can be sued
It must file a tax return
Forming a corporation is like putting up a wall between the business and its owners’ personal assets.
Why would the law give corporations some of the same rights as individuals?

24. Corporation advantages and disadvantages
Corporation owners are not responsible for the actions taken by the business
Debts are not the responsibility of the owners (limited liability)
The business can sell shares (stock) in the business to the public in order to raise capital
Disadvantages:
Legally complex to start and operate
One of the two most regulated business forms (the limited liability company is the other)
Profits are taxed twice—once as corporation income and again as investor income

25. Limited liability company (LLC): Bridging the gap
Characteristics:
Typical size: small to mid-sized businesses
LLCs combine some aspects of a partnership and some aspects of a corporation
Like a corporation, an LLC is treated as an individual for purposes of ownership and legal standing, but it is not taxed at the higher corporate rates

26. LLC advantages and disadvantages
LLC partners have more flexibility to allocate profits and losses
Debts are not the responsibility of the partners (limited liability)
An LLC can choose to be taxed as the property of the owners (like a partnership) or an individual (like a corporation)
Disadvantages:
Like a corporation, an LLC is governed by complex laws
The owners of an LLC normally can’t be employees
When a partner dies, the LLC is dissolved

27. Responding to changing conditions
Whichever legal form you choose at the start of your business, it doesn’t have to be permanent
This possibility should be part of your long-range business planning and strategy
What conditions might raise the risk of personal liability?

28. Forms of Business Ownership
What type of ownership does ECPak Company fall under?
Why?

29. Business Ownership
If you were to start a business, what type of ownership would you choose and why?
Sole Proprietors get in a group
Partners get in a group
Corporations get in a group

30. Business Ownership
Why would you like your business to be organized in this fashion?
Download- Worksheet: Pros and Cons of the Forms of Business Ownership

31. Business Ownership
Research and evaluate a specific form of business ownership and then write a summary that addresses its specific advantages and disadvantages

32. Lesson Objectives
Identify and describe all parts of the business life cycle
Describe the concept of capital and discuss how businesses raise capital and why they need it
Compare and contrast different forms of business ownership

33. Lesson Take Away’s The business life cycle reminds me of…
Capital refers to…
One thing I realized about business ownership is…

34. Cross-Curricular Integration
Language Arts: Research memo writing as a genre.
Research a particular format of a memo and understand its purpose
Next, pretend that you are a manager of a large corporation and you need to write a memo to your employees about a specific policy change.
Draft a memo explaining the situation and what action is needed to correct it.