Why Is Limited Liability Such an Important Aspect to Investors

question 66

Essay

Why is limited liability such an important aspect to investors?

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), representing a company's profit from regular operations, excluding non-operational income and expenses.

Retained Earnings

Profits that a company has earned to date, less any dividends or other distributions paid to shareholders.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating the company's bottom line.