Following Is a List of Advantages and Disadvantages of the Corporate

question 185

Essay

Following is a list of advantages and disadvantages of the corporate form of business. Identify each characteristic as either an advantage (A) or a disadvantage (D).
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$\begin{array}{|l|l|}\hline\text { Corporate Characteristic } & \begin{array}{c}\text { Advantage (A) or } \\\text { Disadvantage (D) }\end{array} \\\hline \text { Entity can raise more money } & \\\text { than a partnership or sole } & \\\text { proprietor. } & \\\hline \text { Startup costs are higher than } & \\\text { other business forms. } & \\\hline \text { Stockholders' liability is limited. } & \\\hline \text { There is no mutual agency } & \\\text { among the stockholders and the } & \\\text { corporation. }\\\hline\end{array}$

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Definitions:

Earnings Per Share

A measure of a company's profitability calculated by dividing net income by the number of outstanding shares.

Net Operating Income

Represents the amount of profit realized from a business's operations after subtracting all operating expenses from operating revenues.

Common Stock

A type of equity security that represents ownership in a corporation, with voting rights and potential dividends.

Return on Equity

A financial ratio that measures the profitability of a firm in relation to its equity, indicating how well a company uses investments to generate earnings growth.