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American Business Growth & Expansion

Expanding Markets & Sales. American Business Growth & Expansion. Owners & Investors follow financial statements ***Income Statements*** Detailed sales, expenses, net income, and cash flows Business grows through investments -Cash Flow either reinvested into business or paid out in form

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American Business Growth & Expansion

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  1. Expanding Markets & Sales American Business Growth & Expansion

  2. Owners & Investors follow financial statements ***Income Statements*** Detailed sales, expenses, net income, and cash flows Business grows through investments -Cash Flow either reinvested into business or paid out in form of stockholder dividends. Depreciation: Non-cash charge applied to income before tax to Lower taxable income, but applied back into cash flow because money never actually Leaves firm…used for reinvestment Importance of Cash Flows INCOME STATEMENT Sales of Goods $1,000 Less: Cost of goods sold $400 Wages $250 Interest $50 Depreciation $100 Earnings before tax $200 Less: Taxes (40%) $80 Net Income $120 Plus: Depreciation $100 Cash Flow $220

  3. Horizontal: firms who produce same product joining together Vertical: firms involved in different stages of manufacturing or marketing joining together Reasons Why: Efficiency Faster Growth Better Product Elimination of Rival Change Image • Merger: Two or more businesses joining to create one firm. Types of Mergers

  4. Corporation Categories • Conglomerates -One firm -Min. Four Different Businesses -Making different products -None designated as majority of sales Ex. Sony, Samsung, Daewoo • Multinationals -One firm -Numerous international production sites -Taxes paid in each country Ex. General Motors, Nabisco, Mitsubishi, Sony • Pro: economic growth in production communities • Con: takes advantage of unskilled labor, local natural resources, little community service, alters communal traditions

  5. Question? • Do you believe multinationals do more to help international communities or hurt international communities?

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