The author’s main theory is that the economy is headed for a recession. The text book defines fiscal policy as: Changes in government spending and tax collections designed to achieve a full-employment and non inflationary domestic output. Government spending is understated and slightly overlooked in the article. The author only hints of the fact that federal government spending on defense is down. “Another negative factor was a 6.6 percent drop, on an annualized basis, in federal defense spending.” She supports that the decrease in GDP is directly related to the decrease in government spending g which proves how fiscal policy can affect overall economic growth.
Congress must agree on a plan, which could take years, and then the market must be weaned slowly from dependence on the companies and the financial backing they provide. The reasons by now are well understood. Fannie and Freddie, created to increase the availability of mortgage loans, misused the government's support to enrich shareholders and executives by backing millions of shoddy loans. Taxpayers so far have spent more than $135 billion on the cleanup. The much more divisive question is whether the government should preserve the benefits that the companies provide to middle-class borrowers, including lower interest rates, lenient terms and the ability to get a mortgage even when banks are not making other kinds of loans.
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.
c. Due to legal considerations related to ownership transfers and limited liability, most business (measured by dollar sales) is conducted by corporations. d. Statements a, b, and c are correct. e. All of the statements are false. 3. Harmeling Enterprises experienced a decline in net operating profit after taxes (NOPAT).
Real World Case 12-6 Corporations frequently invest in securities issued by other corporations. Some investments are acquired to secure a favorable business relationship with another company. On the other hand, others are intended only to earn an investment return from the dividends or interest the securities pay or from increases in the market prices of the securities—the same motivations that might cause you to invest in stocks, bonds, or other securities. This diversity in investment objectives means no single accounting method is adequate to report every investment. Merck & Co., Inc., invests in securities of other companies.
ACCT504 FINAL EXAM A GRADED v1. August 24, 2013 1. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? Reduced legal liability for investors Harder to transfer ownership Lower taxes Most common form of organization 2. Dividends _____.
A flat tax employs territorial taxation, which is when the government only taxes income that is generated within national borders (Meehan). In the global economy, taxes remain a critical component of business; countries with low-taxes benefit from jobs and capital (Meehan). A good tax policy is important to generate revenue for business and also because the penalty for a poorly received tax system on a global scale may be substantial and long-term (Meehan). The flat tax eliminates
Among solutions to the agency problem in publicly-held corporations are all of the following EXCEPT Answer a. stock options. b. performance shares. c. cash bonuses tied to goal achievement. d. bonuses based on short-term results. 4 points A more recent issue that is causing major problems in the business community is Answer a. the privatization of ownership.
A. employees B. suppliers C. shareholders D. managers 8) Which of the following is NOT a principle of basic financial management? A. Risk/return tradeoff B. Incremental cash flow counts C. Efficient capital markets D. Profit is king 9) Difficulty in finding profitable projects is due to: A. social responsibility. B. competitive markets. C. ethical dilemmas.
A Slippery Slope Adam Smith’s theory on free market, the plan that governments should not interfere with the management of an economy, has been exalted and practiced by political leaders in the United States, Great Britain and other capitalist countries. Howbeit, in 2008, the United States faced economic crises with many of its financial institutions and big corporations in trouble. The long held ideology of Adam Smith was forsaken and the Emergency Economic Stabilization Act was passed by the Bush Administration, in which the United States government gave $700 billion dollars to many failing financial institutions and private companies. [i] This act gave the United States government non-voting shares in private companies and injured