One of the Disadvantages of Operating a Business as a Sole

question 16

Multiple Choice

One of the disadvantages of operating a business as a sole trader is:

• A)you have limited liability for the debts of the business.
• B)your creditors are not legally required to help you pay your business debts.
• C)you have unlimited liability for the debts of the business.
• D)banks are prohibited under state and federal legislation from lending the sole traders more than 50% of the value of the business.

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Definitions:

Anticipated Growth Rate

An expectation of the rate at which a company, asset, or economy will grow in a future period, often used in investment analysis.

Return On Equity

A measure of a corporation's profitability, indicating how much profit a company generates with the money shareholders have invested.

Dividend Per Share

The amount of dividend that a company pays out over a year divided by the total number of its outstanding shares.

Earnings

The net amount of money a company earns during a specific period, often reported quarterly or annually, indicating its profitability.