Alternative Forms of Ownership (3)
Posted on November 30, 2008 - Filed Under Finance | Leave a Comment
A claim on the residual earnings of the firm. A corporation sells products or services and realizes revenues from the sales. To produce these revenues, the corporation must incur expenses for materials, labor, insurance, debt capital, and so on. Any excess of revenues over expenses—the residual earnings—belong to the shareholders of the business. Often, a […]
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Posted on November 29, 2008 - Filed Under Finance | Leave a Comment
Investor-owned corporations may be either publicly held or privately held. The shares of publicly held companies are owned by a large number of investors and are widely traded. For example, HCA, which owns and operates roughly 180 hospitals and has about 500 million shares outstanding, is owned by some 50,000 individual and institutional stockholders. Another […]
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Posted on November 28, 2008 - Filed Under Finance | Leave a Comment
Unlike other sectors in the economy, not-for-profit corporations play a major role in the healthcare sector, especially among providers. As we discussed in Chapter 1, about 60 percent of the hospitals in the United States are private not-for-profit hospitals. Only 15 percent of all hospitals are investor owned; the remaining 25 percent are governmental. Furthermore, […]
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Posted on November 27, 2008 - Filed Under Finance | Leave a Comment
The limited liability company (LLC) is another new type of business organization. It has some characteristics of both a partnership and a corporation. The owners of a LLC are called members, and they are taxed as if they are partners in a partnership. However, a member’s liability is like that of a stockholder of a […]
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Posted on November 26, 2008 - Filed Under Finance | Leave a Comment
Although the three basic forms of organization—proprietorship, partnership, and corporation—dominate the overall business scene, several hybrid forms of organization also are used by businesses. Some of these forms are found in the health services industry.
Several specialized types of partnerships have characteristics somewhat different than a standard form of partnership. First, limiting some of the partners’ […]
Corporation (3)
Posted on November 25, 2008 - Filed Under Finance | Leave a Comment
The bylaws are a set of rules drawn up by the founders to provide guidance for the governing and internal management of the corporation. Bylaws include features such as: how directors are to be elected, whether
existing shareholders have the first right to buy any new shares that the firm issues, and the procedures for changing […]
Corporation (2)
Posted on November 24, 2008 - Filed Under Finance | Leave a Comment
The corporate form of organization has two primary disadvantages. First, corporate earnings of taxable entities are subject to double taxation—once at the corporate level and then again at the personal level, when dividends are paid to stockholders or capital gains are realized. Second, setting up a corporation, and then filing the required periodic state and […]
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Posted on November 23, 2008 - Filed Under Finance | Leave a Comment
A corporation is a legal entity that is separate and distinct from its owners and managers. The creation of a separate business entity gives these primary advantages:
A corporation has unlimited life and can continue in existence after its original owners and managers have died or left the company.
It is easy to transfer ownership in a […]
Alternative Forms of Business Organization (2)
Posted on November 22, 2008 - Filed Under Finance | Leave a Comment
A partnership is formed when two or more persons associate to conduct a non-incorporated business. Partnerships may operate under different degrees of formality, ranging from informal oral understandings to formal agreements filed with the state in which the partnership does business. Like a proprietorship, the major advantage of the partnership form of organization is its […]
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Posted on November 21, 2008 - Filed Under Finance | Leave a Comment
Throughout the book, the focus is on business finance—that is, the practice of accounting and financial management within business organizations. There are three primary forms of business organization: proprietorship, partnership, and corporation. In addition, there are several hybrid forms. Because most health services managers work for corporations and because not-forprofit businesses are organized as corporations, […]
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