A firm’s value depends on the positive net income generated in the past. True False A firm’s value depends on the firm’s ability to generate positive cash flows now and in the future True False When determining the value of a firm, which of the following statements is true? • Inversters are risk neutral. Other things equal they prefer to pay more stocks that are less risky and have uncertain cash flows • Investers love risk. Other things equal they prefer to pay more for stocks that are more risky and have uncertain cash flows.
Their objectives are often huge which requires a lump-sum to be invested. The older people choose this security also because it gives fixed income which is guaranteed, there is minimal risk and less management needed. 8) What is laddering GICs? Pros and cons? Ans): Laddering GIC(s) is a proven method of investing (also known as a laddering strategy) it can help you reduce the risk of interest rate fluctuations and increase your portfolio's overall return.
A rising ROE suggests that a company is increasing its ability to generate profit without needing as much capital. It also indicates how well a company's management is deploying the shareholders' capital. In other words, the higher the ROE the better. Falling ROE is usually a problem. CAGR: Operating income, % Operating income (EBIT) measures a company's earning power from ongoing operations and it largely used by investor because it excludes the effects of different capital structures and tax rates used in different companies.
In my opinion, I believe the risk can be worth it because you can make a lot of money this way. Also, if you do proper investigation of the company you will have further insight that can lead you to making a good choice. I wouldn’t buy any premium bonds. They’re expensive and the payout isn’t worth it. The only upside is that it is very secure but I’m more interested in making
The truth is that properties that do well at Auction would have sold well with any method of sale (provided you have a skilled agent representing you) because they are usually very good properties. Advantages: 1. Provided the Auction attracts enough interest, competition among the bidders gives the potential to achieve a high price for the property 2. You don’t need your agent to have the skill to instill urgency in your buyers to make offers because the Auction does this automatically 3. Perhaps the biggest advantage of the Auction method is that you have the flexibility to accept a good offer PRIOR to Auction.
Generally, free cash flow is cash flows provided by operating activities less cash flows used by investing activities for the purchases of plant, property and equipment and the repayment of long-term debt. If there is cash left over, it is “free” to be distributed to the owners of the entity or reinvested in the business. Over time, the entity that generates the highest free cash flow will be the most successfully financial company in terms of return on the owners’ investments. There are generally a number of differences between cash provided by operating activities and net income. The most obvious differences are that net income is presented on an accrual basis and that net income includes non-cash expense and income items.
It will show where it comes from, and where it goes. This indicates the company’s profitability, as shown in the net income, and their ability to meet obligated debts. It is possible for a company to have success in sales and net earnings and still fail to generate enough cash flow to meet obligations. The Home Depot is reporting a well maintained cash balance as reported in the balance sheet, and its operations continue to keep the influx of cash coming. The Home Depot cash flow shows significant net earnings and the cash flow statement does not indicate a drastic drop from previous years.
1. Outright purchase of Smith stock a) Yes, Mr. Jones should purchase the stock of Smith outright, leaving Smithon intact as purchasing the stock of Smith co. is the simple and reasonable transaction where he can also minimize the cost of administrative matters. While issuing debt in his Johnson Services Co. to pay for the Smith Company there can arise debt issue for Johnson co if the cash flow of the company is insufficient in making such purchase to buy Smith co stock. b) Converting C corp to S corp has taxation benefit as C corp faces double taxation. Here, converting Smithon to S corp can give an advantage of having a control of limited or small number of shareholders.
Without proper cash management and regardless of how fast a firm’s sales or reported profits on the income statement are growing, a firm cannot survive without carefully ensuring that it takes in more cash than it sends out the door. When analyzing a company's cash flow statement, it is important to consider each of the various sections that contribute to the overall change in cash position. In many cases, a firm may have negative overall cash flow for a given quarter, but if the company can generate positive cash flow from its business operations, the negative overall cash flow is not necessarily a bad
The quality is not compromised with the cost factor and thus becomes the strength with increased profits. Second, it has its own established brand name which serves as a major strength as compared to its competitors. These strengths can be considered as a distinctive strength because both the low cost and brand name positioning serves a competitive advantage which in turn leads to more profitability and major share in achieving the industry trusts as well as confidence. Weaknesses: First, Customer Service is the parameter for which DeVery needs to put hard woks for it. Second, the quality of the degree should be improved in order to stand apart from its competitors.