Sole proprietorship partnership corporation

ownership Multiple ownership Unlimited ownership

Sole ownership
Legal requirements and Few, entity easily Few, entity easily numerous legal
regulation form form requirements
Legal distinction between none None, Legal separation
owner and business between owner and
business
Liability unlimited Unlimited, shared limited
among partners
Ability to raise capital limited Nearly unlimited
Very limited
Transferability of None transferable Nontransferable Easily transferable
ownership
Owner expertise in essential essential Unnecessary
business

NWC = CA – LC

NI = R – E ; = revenue – Expenses

NI = Dividends + retained

Method 1
1) CFFA = CF/CR + CF/SH
CF/CR = interest paid + Net new borrowing

CF/SH = Div paid - Net new raised

Method 2
2) CFFA = OCF – NCS – NWC

OCF = EBIT + D – T
NCS = Ending FA – Beg FA
NWC = Ending NWC – Beg NWC

Ratios:

Current = Current assets (CR)

Current liabilities
Total Debt = debt due in one year + long term debt + deferred income taxes + other noncurrent
liabilities
Debt to Equity ratio = total debt / total equity D/E

Times interest earned ratio = interest coverage ratio = EBIT/ interest payments (TIE)

Total asset turnover = total revenue / (Avg) total assets (TA turnover)

Profit Margin = Net profit margin = Net income/ total revenue (NPM)