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Basile [38]
2 years ago
13

True or false?

Business
1 answer:
Nimfa-mama [501]2 years ago
5 0

Answer:

Both statements are False

Explanation:

<u>Statement a</u>

As with higher debt involved the expected return on investment is more on equity. But reducing debt up till a certain level is beneficial in that condition, but there is an ideal debt to equity ratio of 1 - 1.5, it varies upon the industry requirements and conditions.

Although the theory which states that reducing debt will reduce cost of equity and of debt is false as there is a tax benefit on debt which states that cost is always less of debt.

<u>Statement b</u>

Financial distress and bankruptcy has several reasons to occur, and one of them is borrowing.

It do not depend on the level of borrowings, whether moderate or high, borrowings demand compulsory payment in the terms of interest due, which leads to a burden on the company. This also increases the demand of shareholders.

Thus, the statement is false.

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only a monopolistically competitive firm operates at its efficient scale. both a perfectly competitive firm and a monopolistical
irinina [24]

Answer:

Correct Answer:

only a monopolistically competitive firm operates at its efficient scale.

Explanation:

In a given market, a given organization or firm could operate either in a monpolistically competitive or perfectively competitive at its efficient scale. However, in the long run, only a monopolistically competitive firm operates at its efficient scale.

3 0
2 years ago
ASSETS Cash $ 20,000 Accounts receivable 80,000 Inventory 50,000 Net plant and equipment 250,000 Total assets $ 400,000 LIABILIT
Dahasolnce [82]

Answer:

The firm's receivable turnover is 20 times

Explanation:

The computation is shown below:

Accounts receivable turnover ratio  = (Credit sales ÷ average accounts) receivable

where,  

Average accounts receivable = (Opening balance of Accounts receivable + ending balance of Accounts receivable) ÷ 2

= ($0 + $50,000) ÷ 2

= $25,000

And, the net credit sale is $500,000

Now put these values to the above formula  

So, the answer would be equal to  

= ($500,000 ÷ $25,000)

= 20 times

And, the average collection period in days = Total number of days in a year ÷ accounts receivable turnover ratio

= 360 days ÷ 20

= 18 days

7 0
2 years ago
Which of the following statements represent a weakness or limitation of ratio analysis? Check all that apply. A firm may operate
Art [367]

Answer: A firm may operate in multiple industries.

Different firms may use different accounting practices.

Explanation:

Ratio Analysis as you probably know is a very useful tool in financial analysis. It works by comparing ratios based on items in the financial statements of a company to measure certain things such as the Company's Liquidity, Profitability and the like.

It does have certain drawbacks though such as,

A firm may operate in multiple industries

When a firm is operating in multiple industries. Comparing ratios is not a simple task. Different industries record profits and costs differently and just because a ratio is held in high esteem on one company does not mean it is good in another thereby making comparison based on ratios alone quite cumbersome.

Different firms may use different accounting practices

Now if different companies use different Accounting practices, you might find that ratios cannot be straightforwardly compared because different types of figures were used by the different companies. For instance, some companies might use a Straight Line Depreciation method as opposed to a Reducing Balance method which will have varying effects on income.

4 0
2 years ago
Assume an unlevered firm has total assets of $6,000, earnings before interest and taxes of $600, and 500 shares of stock outstan
RideAnS [48]

Answer:

The amount of the change in the earnings per share as a result of this change in the capital structure will be $0.16

Explanation:

                                                                     all equity       equity and debt

expected EBIT                                               $600                  $600

interest                                                              (-)                     ($192)

profit before tax                                              $600                  $408

tax                                                                      (-)                         (-)

earnings to equity share holders                   $600                   $408

number of equity sahes                                    500                      300

earnings per share                                           $1.20                     $1.36

change in the earnings per share  = $1.36 -  $1.20

                                                         = $0.16

Therefore, The amount of the change in the earnings per share as a result of this change in the capital structure will be $0.16

7 0
2 years ago
The team members of the technical team in Wescrult Inc. are working on a crucial project. Their previous manager assigned respon
Gala2k [10]

Answer:

The correct answer is d. controlling.

Explanation:

If there is an important section in project management, it is the control section. Once it has been decided to start, with the execution, the project manager must assume the responsibility of each person within the same fulfills the tasks assigned to him and thus, ensure that the project runs according to his planning.

The idea of ​​project control is very simple: it has been elaborated with some objectives, studying the available resources and preparing a plan to achieve the goals. Control is what ensures the follow-up of these plans, preventing any team member from deviating from the marked route. Thanks to the control tasks, the achievement of objectives will be ensured as defined in the planning phase.

When the project has already been planned, it should be put in place. The main requirement to start is that the project is fully defined and approved by the steering committee or the shareholders' meeting and, where appropriate, by the sponsor of the actions to be carried out.

6 0
2 years ago
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