1. Question : (TCO D) Which of the following statements concerning common stock and the investment banking process is NOT CORRECT? (a) The preemptive right gives each existing common stockholder the right to purchase his or her proportionate share of a new stock issue. (b) If a firm sells 1,000,000 new shares of Class B stock, the transaction occurs in the primary market. (c) Listing a large firm's stock is often considered to be beneficial to stockholders because the increases in liquidity and reputation probably outweigh the additional costs to the firm.
For example, Fernetti Conductor has a specific budget for advertising, purchasing, sales production and cash budget. Then, each budget should be compiled into a master budget for the operations of the entire company. The consequences of telling the president of gross miscalculation are as follows; 1) The sales budget predicts the number of units a company expects to sell. Therefore, by inform the President that sales projection is overstated; he can correct his statement by telling the audience the new target units that shoul be produced by the company. 2) The sales budget calculates how much the company will spend to produce the required number of units.
Economic costs of inflation- Inflations economic costs would include damage to competitiveness as high inflation could cause spiralling price multiplier effect; as prices go up workers would demand higher wages so increasing business costs and another round of price rises to maintain business profits- making exports for expensive, thus reducing the demand for them causing a decrease and AD domestically. Additionally this may lead to unemployment as more costs to the firm i.e. menu costs. Change in inflation could also cause uncertainty to consumers/businesses to spend and invest as they don’t know what the future holds, this can decrease confidence in the market and potentially, in the longer term, cause and reduction in AD. Economic costs of deflation- deflation has proved to have several economic costs, the main cost is that it encourages differed expenditure where people’s expectations change and they delay spending in the hope of getting a better deal.
Inflation damages businesses because it causes uncertainly. A rise in the rate of inflation might reflect a rise in the cost they have to pay; for example: * Employees will want more wages * Costs of materials may go up * Cost of fuel and energy may also rise. These rising cost will eat into the business profit. This keeps businesses to then have a choice to either keep prices constant or to see profits fall or raise to raise prices and perhaps lose out on competitors. The
Colonies can be used to benefit the country. An example would be building a marketplace in a colony to accelerate the buying/selling of demands. It could also be used to build military power to defend the economic interest in a colony. After all colonies were taken, many countries started fighting and war broke out. They also thought that having a large empire would help to make them richer and more militarily powerful .People were greedy to get their hands on the colony for the sake of the money they can get.
This can make expanding and growing very difficult and decisions must be mad wisely. When it comes to their products that are purchased around the world to ensure high quality, expanding may affect that quality, making it hard to supply a specialty product. Going public through an IPO, may change the very decision made that make their company special, or it may enhance their products by providing more resources. Acquiring another company in the same industry to help their company grow could cause increased financial stability or increase their financial burden. Kudler can merge with another organization in hope to expand while implementing their mission and values on that organization or that organization may hurt their reputation.
* Product lines that were not covering their avoidable costs could be dropped. * New product development is likely to receive more focus as the review program identifies areas of increasing demand. * Gourmet is likely to benefit from better monitoring of competitors’ product development, prices, and market share trends. F. This is an open-ended question; the specific steps are likely to vary based on the circumstances and the information found. Analysis for a given product might include the following general steps: * Identify the product to be analyzed by using a quantitative monitoring technique (e.g., size decline in contribution margin or sales) or some other method * Obtain and analyze detailed revenue and cost data prior periods; look for negative trends * Obtain and analyze the correlation of sales for this product with other products; look for potential relationships with other products that might influence a decision to drop the product * Obtain and analyze industry information about the product; look for information about trends in customer tastes, competition,
The SOX also calls for additional audits which increase business costs. If a business has increased costs and expenses due to the abidance of the SOX, it will most likely take money from other aspects of the business which can negatively impact the investors. The effectiveness of the SOX is debated by the advantages versus the disadvantages that companies and investors face. De Vay (2006) stated that, “The majority of the survey respondents feel that the benefits of
Going back to the selling to customers with a higher credit risk, while they say that they will review the aging of the accounts receivable on a daily basis, is that possible for Loren to do on top of all the other work that needs to be done? Or in this case would they need to hire another person to take some of Loren’s workload which would in the end cost even more money for the company. In each of these situations they are talking about spending more money to keep away from the risks that are mentioned, but if they get to the point where they are losing money because of the risk and also because of the extra position that they added, they could be in really big trouble
Therefore, the main challenge Innocent might face is to trying to increase the demand. To increase the demand they might have to lower the price of the goods. This means that they need to provide cheaper price so that customers can afford. Innocent also need to create or develop new products to add extra value. They might go to talk with customers to observe what products they buy and how much they pay for it.