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Glossary of Credit Management Terms. Letter
P
Parent company:
A company that owns or controls subsidiaries
by buying up all or the majority of their shares. A company has
a controlling interest in another when it has acquired over 50%
of its issued shares which have voting rights. Where a parent company
does not operate in its own right, it is called a
holding company.
Partnership:
A type of business unit in which two or more
persons join together to carry on some form of business activity.
In what is termed an Ordinary or General partnership, all the partners
jointly share the management of the business though their percentage
of profits made is normally in proportion to the amount they have
invested as capital into the business. All ordinary or general partners
are responsible jointly and severally for all the debts and obligations
of the business, up to the full value of their personal belongings
(with certain minor exceptions). Another name for a partnership
is a “firm”. See
also, Limited liability partnership.
Preference shares:
These normally carry a fixed rate of dividend
which is paid before the dividend on Ordinary
shares. There are many types of preference shares, such as non-cumulative,
cumulative, redeemable, etc. Preference shares sometimes do not
carry voting rights.
Prepaid expenses:
Rates, rent, insurance premiums, etc. normally
payable in advance.
Private Company:
A private company is any registered company that is not a public
company. The shares of a private company may not be offered to the
public for sale. The legal requirements for such a company are less
strict; for example, there is no minimum issued or paid-up share
capital requirement and small and medium-sized companies need not
file full accounts.
Profit (loss):
Profit is the excess of income over expenses.
Loss is the excess of expenses over income.
Profit and loss statement:
A business financial statement that lists revenues, expenses, and
net income throughout a given period. Because of the various methods
used to record transactions, the monetary values shown on an income
statement often can be misleading. Also known as Earnings
report, Earnings statement,
Operating statement, or
Income statement.
Profit Margin:
A measurement of trading success –
the calculation of profit as a ratio to (a)net sales (b) capital.
Pro forma:
Can be:
- An invoice drawn up by seller and sent to
the buyer to confirm the details of a contract;
- A polite reminder that a debt will be due
for payment;
- For despatch to an agent when goods are sent
on consignment basis;
- By an exporter to show charges e.g. packing,
freight etc.
Proprietor:
Individual ownership or sole proprietorship;
it is the type of business unit in which only one person is liable.
It is the simplest form of business organisation. The owner is responsible
for all management decisions, takes all the profits and bears all
the losses. His liability is unlimited, and not only his business
assets, but the whole of his private belongings (with certain minor
exceptions) can be taken from him to satisfy business debts.
Public Limited Company:
A company registered under the Companies
Act (1980) as a public company. Its name must end with the initials
`plc'. It must have an authorized share capital of at least £50,000,
of which at least £12,500 must be paid up. It may offer shares
and securities to the public. The regulation of such companies is
stricter than that of private companies. Most public companies are
converted from private companies, under the re-registration procedure
in the Companies Act.
Public record information:
Information obtained on business concerns etc. from sources generally
available to any person who may be interested in such information.
The sources of this type of information are, for example, the Register
of County Court Judgments and the London
Gazette.
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