Principles of Management, WT12/13
PoM: Exercise 3
1. Use the following criteria to characterize a single‐person enterprise, a general partnership (OHG) , and a limited liability company (GmbH): a) b) c) d) e) f) Minimum capital requirements Number of founders/partners Liability risk Right of participation Property Rights Foundation of the enterprise
2. In the context of partnerships, explain what is meant when speaking of personal, primary, unlimited, and illimitable liability?
3. Pear Inc. is one of the leading producers of consumer electronics. In the following you can see the balance sheet at the beginning of the year 2011. Pear Inc. Balance sheet For the year beginning January 01, 2011 (in millions of U.S. dollar) Resources Sources Cash 450 Accounts payable 300 Accounts receivable 50 Notes payable 400 Inventory (finished goods) 520 Contributed capital 250 Property, plant and equipment 380 Retained earnings 500 Other assets 50 1.450 1.450
Over the course of the year the following activities occur:
1. Pear Inc. pays out $60 million in cash as dividends to its shareholders. 2. Pear Inc. sells half of its inventory for $400 million on credit. 3. Two weeks before buying new machines, Pear Inc. takes out a loan of $150 million from a bank to finance the next transaction (4.). 4. To produce the latest version of its mePad, Pear Inc. purchases the new machines for $150 million in cash. 5. Pear Inc. pays out $90 million in cash as wages to its workers. 6. One of the managers of Pear Inc. buys himself a private jet worth $25 million, paying in cash with his own money. 7....
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